On Wednesday, May 26, the Senate Finance Committee voted 5-2 to include SB 130, the school voucher bill, into the larger state budget package. The proposal, which is heavily opposed by Granite Staters, would allow public taxpayer dollars to pay for private and homeschooling expenses through “Education Freedom Accounts,” or vouchers.
The Senate also added in a provision that would restore approximately $62 million in state funding for New Hampshire’s public schools. The Senate chose not to restore the disparity aid that provides towns with low property tax bases with additional funding and property tax relief. As a result, these towns will likely have to make up approximately $27 million through tax increases, budget cuts, or a blend of the two.
The state budget bill is scheduled to go to the full Senate for a vote on Thursday, June 3.
The Senate added a revised version of SB 130 into the state budget, removing the income eligibility requirement after the first year: Once students have been assigned a voucher, their families no longer need to prove income eligibility. There is no fiscal note attached to the bill, so lawmakers don’t know how much it will cost the state. According to Reaching Higher NH’s projections, if half of the eligible students adopted a voucher, it would cost the state about $70 million in new state spending in its first three years.
SB 130 has been widely rejected by Granite Staters due to concerns over the harm it would cause to students, schools, and communities. Public opposition to the proposal outstrips support 6:1, which forced the House to stall its version. By adding it to the state budget bill, the Senate is allowing it to evade not only the public scrutiny of hearings and floor votes, but also the kind of work that usually goes into a large proposal like SB 130.
“This committee should not wrap into [the state budget] such a complex bill for all its unintended consequences, unless and until they can do the kind of multi-month deep dive into the specifics of the bill that House Finance did in 2018 and fix it,” David Doherty, a former state representative from Pembroke, told the Senate Finance Committee during a public hearing earlier this month.
Doherty served on the House Education Committee in 2018 when the legislature was considering a similar voucher bill, and said that even through 13 work sessions, the Republican-led committee couldn’t work through the issues and nuances of the bill — and that those unresolved issues remain in this year’s voucher bill.
The income requirement was added in March in order to target the program to low- and middle-income families. Under the current proposal, a student would be eligible if their family income is less than 300% of the Federal Poverty Guideline (approximately $79,500 for a family of four) at the time of application; after the student has been awarded a voucher, the income requirement is lifted.
The revision would expand eligibility, as participating students would still qualify if their families had a jump in income.
SB 130 was added to the budget on a 5-2 vote, with unanimous Republican support. Senators Cindy Rosenwald (D-Nashua) and Donna Soucy (D-Manchester) were the sole no votes.
New Hampshire’s public schools are facing an $89 million drop in state funding this fall, and an amendment added on Wednesday would restore approximately $62 million of that gap.
The amendment would incorporate the elements of SB 135 into the budget, which would allow the NH Department of Education to use a student count method to calculate state funding instead of the proportion method that was proposed by Governor Sununu. SB 135 was retained by the House Education Committee last week.
The amendment would protect districts from funding cuts due to pandemic-related enrollment drops and declines in school meal program participation. Drops in school enrollment, which are concentrated in younger grades, are expected to rebound as schools start a new year.
An amendment by Sen. Erin Hennessey (R-Littleton) would create a $17.5 million “relief fund,” which would target funding to school districts with higher proportions of students navigating poverty.
“I am excited to include $17.5 million per year for struggling schools,” Sen. Hennessey said when introducing the amendment.
The amendment passed unanimously.
Statewide property tax
Senate President Chuck Morse (R-Salem) declined to remove a $100 million property tax reduction from the state budget, which is expected to benefit mainly property-wealthy towns and translate into a dollar-for-dollar cut in federal COVID relief from the American Rescue Plan.
The statewide education property tax (SWEPT), which is uniform across the state, is raised by local towns and kept as a “credit” to their school funding grant.
Since it is uniform, towns raise drastically different amounts of money depending on the property wealth of their towns. Moultonborough, for example, raised $14,822 per student in 2020 under the tax rate, while Rochester raised approximately $1,214 per student.
Due to widely variable property tax bases, the SWEPT reduction would benefit higher wealth towns like Moultonborough. At the same time, due to federal regulations, the property tax cut is expected to result in a $100 million reduction in funding from the American Rescue Plan, the latest federal COVID relief package.
The decision to keep the SWEPT tax cut “would provide more funding raised by the State through non-property tax sources to local public education, but would do so in a less targeted manner than the one-time assistance provided in the current State Budget,” wrote Phil Sletten, Policy Analyst for the NH Fiscal Policy Institute. The current state budget includes approximately $60 million in aid targeted to those towns with low property tax bases (like Rochester) and those that serve large populations of students navigating poverty.
The Senate Finance Committee is scheduled to vote on a recommendation for the state budget bill with amendments on Friday, May 29. The full Senate is expected to vote on the bill on Thursday, June 3.
Then, the House will have a chance to weigh in at a Committee of Conference, where legislators from both chambers come together to iron out a compromise before it heads to each chamber for a final vote.
It then heads to the Governor’s office, where Governor Chris Sununu can sign it, veto it, or let it pass without signature. New Hampshire is one of a few states that does not have a line-item veto, meaning that he has to act on the entire bill as it is and can’t add or remove items.
The 2022-2023 biennial budget takes effect on July 1, 2021.