As school voucher program cost surpasses $24 million this year, state oversight committee raises questions about transparency and diversion of public funds

A legislative oversight committee charged with monitoring the state’s school voucher program raised questions about the program’s cost and transparency during their meeting on October 25, 2023. The meeting came about a week after the NH Department of Education released the most current enrollment figures for the voucher program, which showed significant growth in both cost and enrollment. 

Senator Ruth Ward (R-Stoddard), who serves as the committee’s Chair and is a staunch supporter of school vouchers, introduced a draft interim report that stated that the program has been “implemented to the satisfaction of stakeholders, in a timely manner, and in compliance with RSA 194-F,” the law that created the voucher program, known in law as the Education Freedom Account (EFA) program, in 2021. 

Senator Suzanne Prentiss (D-Lebanon) and Representative Matthew Hicks (D-Concord) objected to several of the findings outlined in the report. They identified a number of proposed changes and will submit recommendations for discussion at the next meeting. 

According to the NH Department of Education’s latest data, enrollment in the program grew 40% between 2022 and 2023, to a total of 4,211 participants in the 2023-2024 school year. The school voucher program will cost the state an estimated $24 million this year alone, which comes directly from the Education Trust Fund, designated solely to fund New Hampshire’s public and charter schools. 

Originally passed as a way for low-income families to pay for private schools and homeschooling, lawmakers increased the income threshold for eligibility as part of the 2023 state budget. Fewer than half (44)% of the enrolled students this school year are classified as low-income, down from 54% when the voucher program was passed in 2021.

Are funds for public schools being diverted to the EFA program?

That’s one of the questions in the report that was heavily debated. Senator Ward wrote in the report that it does not, but Senator Prentiss and Representative Hicks pushed back, asserting that because the program is funded out of the Education Trust Fund — a fund that’s designated solely for public school funding — it is necessarily diverting funds from public schools. 

Lawmakers added school vouchers as an allowable use of the Education Trust Fund as part of the state budget in 2023, but the Fund was established as an account for the state to pay for its public and charter schools. Under current law, it is illegal for the state to use the Education Trust Fund for anything other than what it’s designated for. 

The Fund pays for the state’s public school adequacy formula, charter school aid, special education aid, school building aid, and Career and Technical Education. Surpluses in the fund have been used to increase state funding for public and charter schools to create one-time infrastructure grants for schools to increase school security measures and other school-related programs. 

The school voucher program, by the end of 2024, will have diverted approximately $45 million from the fund between September 2021 and June 2024. 

“This is just about the dollars. It’s not a question about the program,” Prentiss said. “We have a duty to look at where the money goes and how it gets there.”

Conflict of interest policy

Senator Prentiss suggested that the committee recommends a conflict of interest policy for lawmakers regarding the school voucher program, particularly for lawmakers who have a direct financial interest in the program and its expansion. 

House Majority Leader Jason Osborne (R-Candia) was questioned last year when it was revealed that his wife, Sharon Osborne, owned and operated a learning cooperative that collected nearly $60,000 in state school voucher funds in the past two years. Osborne was the prime sponsor of the state’s school voucher bill and ensured that it was folded into the 2021-2022 state budget. In 2023, he was a sponsor of House Bill 464, which would have created a universal voucher program. 

Representative Hicks, who serves on the oversight committee, questioned whether he’d be subject to the conflict of interest policy because he serves as the headmaster of a private school in Concord. He clarified that, though his school did not seek approval as an educational vendor, parents were reimbursed for tuition payments through the voucher program. 

Program eligibility

The committee debated whether the state should implement annual eligibility testing for families. Under current law, voucher enrollees must only meet income eligibility requirements in their initial application. Once approved, they are eligible to receive a voucher until they graduate or age out of the program at 22 years of age. 

Senator Prentiss recommended that lawmakers consider annual eligibility requirements for the program, similar to other programs like SNAP, TANF, and the federal Free and Reduced Price Lunch (FRPL) program. 

Representative Rick Ladd (R-Haverhill) pushed back against the idea, saying that he doesn’t think that it would be good for a student academically to go in and out of the program. 

Senator Prentiss agreed, and recommended a maximum income eligibility level so that wealthier families would not be eligible for the program. 

The committee agreed to discuss the issue at a later date. 

When looking at the enrollment data from the NHED, over 75% of the voucher recipients did not attend public school prior to enrolling in the program, suggesting that an annual means test would not significantly impact where the student attends school. 

About school vouchers in New Hampshire

New Hampshire’s school vouchers are taxpayer-funded personal accounts that can be used to pay for certain education-related expenses, including private school tuition, homeschooling expenses, tutoring, books and materials, and transportation. Eligible families receive the base amount of state funding per student plus any additional aid for which their student qualifies (eligibility for school meals, special education services, English Language Learner program, or the third grade reading aid). When participating in the program, families agree not to enroll their child full-time into their resident district school or public charter school; however, families may enroll their children into public and charter schools part-time, depending on the policies of the school.

Currently, students are eligible for participation in the program if they are eligible to enroll in a New Hampshire public school and meet the income eligibility guidelines at the time of application. Students only need to qualify in the first year of the program and do not need to meet the income eligibility guidelines in subsequent years. 

Independent studies have suggested that outcomes for participation in similar school voucher programs in other states are, at best, mixed, but more recent studies have suggested that these programs have had significant negative effects on student outcomes for the students who participate in them and have diverted funding from public schools. 

The taxpayer-funded accounts have cost the state roughly $24 million in state funds since the program began enrolling students in August 2021. About 77% of those funds are going to families who have already enrolled their students in private schools or homeschools, even before applying for a voucher.

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