Lawmakers face dueling priorities: Expanding school vouchers or restoring funding for public schools?

The New Hampshire House Finance Committee is considering a bill that would restore $62 million in state funding for public schools, beginning next school year. The funding would restore two key funding programs: one that would allocate funding to schools with more low-income students, and the other that would allocate funding to districts that must levy higher property tax rates on their residents to pay for public education. Both of these programs were eliminated in the most recent state budget cycle. 

The bill also increases per-pupil funding for public schools, from $4,266 to $4,404, in the 2025-2026 school year. That would mean that statewide, public schools would receive an additional $21 million per year, assuming steady student enrollment. All districts would receive the funding, regardless of need. 

The bill, House Bill (HB) 1583, is a step in addressing the chronic underfunding of public schools. According to a recent court ruling, the state has been underfunding its public schools by roughly $500 million per year. While the state has said that they plan to appeal the ruling to the State Supreme Court, lawmakers are proposing to lessen the damage amid massive public pressure and growing inequities among schools across the state. 

Lawmakers are also considering an expansion of the statewide school voucher program, which could cost an estimated $66 million per year, to give parents state funding to pay for private and religious school tuition and homeschooling expenses. The cost of the program, which began in 2021, has ballooned since its inception, and more than 75% of participating families were already enrolled in private schools or were homeschooled. The House passed HB 1665 in February, which is expected to be sent to the Senate in the coming weeks for deliberation. 

The public has sharply opposed school vouchers and the program expansion. Thousands of people opposed the initial bills, and thousands more opposed HB 1665 during its hearing in January. Polling also shows that school vouchers are massively unpopular, with most parents and community members preferring that states adequately fund public schools instead of siphoning state dollars to private schools and homeschooling. 

Lawmakers will have to decide on the path forward for each of the bills. Passing both would add over $120 million to the state education budget and would likely eat the majority of the Education Trust Fund’s budget surplus. Also in need of consideration: lawmakers have filed bills to fix crumbling school infrastructure,  establish incentive programs to address long-standing teacher shortages, and create early childhood education programs. 

House Bill 1583 Restores Funding Cuts

In 2023, Governor Sununu and lawmakers cut two targeted funding programs for public schools: Fiscal Capacity Disparity Aid, which allocates state funding to districts with lower tax capacity (and, consequently, higher tax rates), and Relief Aid, which allocates state funding based on the proportion of low-income students in a district. HB 1583 would restore these two funding streams, adding $62 million in state funding to schools and communities with the highest need. 

Manchester, Nashua, Derry, and Rochester would receive the most in targeted funding, with other communities like Somersworth, Berlin, and Claremont receiving more than $1 million each. Nearly 80% of districts would receive additional state funding under HB 1583. 

Download the full town-by-town analysis here. 

If used solely for tax relief, HB 1583 would have a larger impact in communities like Charlestown, Berlin, Lisbon, and Claremont. Because of the state’s reliance on local property taxes to fund public schools, these districts have much higher tax rates than property-wealthy towns like Wolfeboro, Rye, and Tuftonboro. 

Restoring these two state funding streams would have a larger impact in communities like Charlestown and Berlin than in other communities. 

School funding has been at the heart of education debates in New Hampshire for decades. While  New Hampshire has received an A rating in the total state and local funding amount, the state fails in equitable and fair distribution, meaning that New Hampshire is failing to provide funds to the districts that need them the most. 

Discussions about average cost-per-pupil spending mask the vast inequities inherent in our funding system: school districts like Derry Cooperative spend just over $16,000 per student; while wealthier school districts like New Castle spend over $41,000 per student. 

Expiring federal funds could put added pressure on school districts

New Hampshire schools have received nearly half a billion dollars in pandemic relief funding since 2020 to respond to growing student needs. The funds were allocated based on federal Title I calculations, meaning that more relief funding was given to high-need districts. 

According to federal law, schools must commit the funds by September 2024, putting schools at risk of shortfalls once the funds lapse. The funds, which were largely used for helping students with mental health needs, learning recovery, and hiring specialists to help students with math and reading. Experts warn that learning recovery will far surpass the relief funding timeline and that states should begin to plan on how to meet student needs:

“The financial impact of the expiration of ESSER funds for states and school districts will be exacerbated by several factors: costly state tax cuts, the diversion of resources to school vouchers, inadequate school funding formulas, elevated costs, and an uncertain revenue outlook. 

In combination with these factors, the loss of ESSER funds could have severe implications for students, including risking teacher layoffs, school closures, and the loss of crucial student programming. These risks are especially great in low-income districts, though the impact will be nationwide.” -Center on Budget and Policy Priorities, 2024

School vouchers siphon tens of millions of dollars per year

Lawmakers are considering expanding eligibility for the school voucher program to the tune of $66 million per year. It could triple the cost of the program in New Hampshire: this year, the program cost was $22 million. 

HB 1665 would expand eligibility based on family income: for a family of four, the eligibility cutoff is $109,200 in 2024, and based on the Federal Poverty Guidelines, which are updated annually based on inflation. HB 1665 would increase that threshold to $156,000 for that same family. 

According to RHNH estimates, about 63% of children ages 6-17 would meet the proposed income eligibility criteria. 

About school vouchers in New Hampshire

New Hampshire’s school vouchers are 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 found that outcomes for participation in similar school voucher programs in other states are, at best, mixed. However, 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. Researchers have stated that school vouchers “cause catastrophic academic harm” and have had a worse impact on student outcomes than any other policy or event in public school history, including the global pandemic. 

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