School voucher program will cost public schools over $477K after “phase-out” grants in 2023, according to state estimates

According to data from the New Hampshire Department of Education, the state will send $477,183 to local public school districts to make up for about $954,375 in state funding reductions for students who switched from their public schools to school vouchers (also known as “education freedom accounts,” or “EFAs”). The phase-out grants provide school districts with 50% of the state adequacy funding (base adequacy grant plus differentiated aid) for the first year that students switched from their public schools to a school voucher program and 25% for the second year.

School districts and taxpayers will have to make up for the remainder of the state adequacy funding loss. Public school leaders have repeatedly said that schools will likely have to cut budgets or raise local property taxes in order to compensate for the reductions in funding. Research has suggested that the reduction in student enrollment does not decrease the operating costs of those public schools, and often lead to declines in programming and services, and/or increases in taxes.

Since the state funds its public schools on a per-student basis, lawmakers introduced the phase-out grants as a way to soften the financial impact of students’ withdrawal. The grants were calculated by counting the students who were enrolled in a district public school on the last day of the 2020-2021 school year and entered the school voucher program to start the 2021-2022 school year. Then the DOE estimated 50% of the adequacy grant (base adequacy plus differentiated aid) the district would have received if the student(s) had remained in their district public school during the 2021-2022 school year.

Districts that raise excess SWEPT (collect more state education property tax than their adequacy grant) do not receive the phase-out grant. 

Seventy-five of the state’s 245 school districts will receive the phase-out grants, ranging from $1,893 (for one student withdrawal) to $68,468 (for 27 student withdrawals). The phase-out grants begin in 2023, since the one-year lag in state adequacy funding calculations means that 2022 school funding calculations are based on the 2021 enrollments. 

Download the NH Department of Education Phase-Out Grant Spreadsheet

Manchester, the state’s largest school district, is expected to lose $136,936 in state adequacy funding in 2023. The phase-out grant is estimated to recoup $68,468 in state adequacy funding, meaning that the city will have to make up for the other $68,468.

Nashua is expected to lose about $20,826 in state adequacy funding after the phase-out grant. Rochester and Laconia are expected to lose about $15,000 each. 

Last week, the NH DOE announced that 1,635 students have enrolled in the school voucher program, known as “education freedom accounts,” at an estimated cost of $8.1 million in new state spending this year. The program allows eligible families to receive a taxpayer-funded account to pay for private school tuition, homeschooling expenses, computers, transportation, and other education-related expenses. The majority of the students in the program, which is the most sweeping in the country, were already enrolled in private schools or were homeschooled before the voucher program was signed into law.

Note: This article was corrected on November 17, 2021, to reflect that the phase-out grants include both base adequacy grants and differentiated aid.

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