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Reaching Higher Analysis on SB 193 Finds Disproportionate Impact on Cities and Property-Poor Districts

 

On December 6, 2017, Reaching Higher New Hampshire, a nonpartisan education policy nonprofit, hosted a public information session and released an analysis of SB 193, a bill to create a statewide education savings account (ESA or voucher) program, breaking down the bill’s major components and outlining the financial implications for school districts, local taxpayers, and the state.

SB 193 is a highly consequential piece of education legislation. Key structural aspects of the bill will disproportionately target property-poor communities and could complicate efforts to forecast enrollment and effectively manage budgets. In order to help inform the public about the latest version of SB 193, Reaching Higher’s analysis looks at the following key provisions:

  • Eligibility Criteria
  • The new Stabilization Grants
  • Financial Implications
  • Special Education
  • Academic Accountability
  • Public Oversight

Eligibility:

Using publicly-available data, Reaching Higher estimates that over 70% of students eligible for a voucher will come from communities at or below the state median for equalized valuation per pupil. Such communities are the most vulnerable to fluctuations in enrollment and state aid. The concentration of eligible students in such communities underscores the challenges SB 193 could pose in terms of adequately funding all students’ educations.

SB 193 extends eligibility for vouchers to public school students who are from households with income at or less than 300% of the federal poverty level (~$73,800 for a family of four), who have an Individualized Education Program (IEP) or an accommodation plan, who attend poor-performing schools, or who were not admitted to a charter school or who had an unfunded application for a tax credit scholarship. Students currently in private school who are entering first grade or kindergarten are eligible for a voucher provided they satisfy one of the other criterions (e.g., family income).

The largest pool of eligible students will likely be those from households with income at or less than 300% of the federal poverty level (FPL). As there is no publicly available data on this specific population, Reaching Higher analyzed data on free or reduced-price lunch (FRL) eligibility by school district. Only students from households at less than 185% of the FPL are eligible for FRL and so this population of students would be eligible for vouchers under SB 193. (Note: this analysis is conservative, as it excludes a number of eligible students and so Reaching Higher’s results should be considered a minimal estimation of impact.)

 

Stabilization Grants:

Assuming 3% of eligible students select a voucher, Reaching Higher estimates the state will need to raise and appropriate approximately $31 million over the next five years (beginning in 2018) in order to provide stabilization grants as required under SB 193. The concept of stabilization grants and the legislative language appears borrowed from RSA 77-G, the Education Tax Credit (ETC) program; however, unlike the ETC, where the state can re-allocate state adequacy aid, the stabilization grants proposed by SB 193 would compel the state to make additional spending on top of its normal, budgeted state education aid.

SB 193 compels the Commissioner of Education to disburse a stabilization grant to any school district where the loss in state aid due to vouchers exceeds ¼ of 1% of the district’s voted appropriations in the prior year. The Commissioner will disburse a stabilization grant for five years, meaning that over time the total amount of stabilization grants will grow (e.g., in year 3 of the program, districts will receive stabilization grants for years 1, 2, and 3).

A few structural elements of the bill render precise modeling of the full scope of potential financial impacts unfeasible: the bill requires stabilization grants to go out on September 1 of each year, but in practice, students may select a voucher after that date; and, the stabilization grants do not factor in disparities between districts’ local tax bases (e.g. SB 193 treats Rye the same as Franklin, even though the loss of state aid will have a much more discernable impact on the taxpayers in Franklin given its lower equalized valuation per pupil).

Financial Impact:

 

Three substantive financial outcomes can be realistically expected from the bill. First, school districts, particularly large cities and property-poor districts, will lose significant state aid in the first year – Reaching Higher estimates this amount will be around $5.8 million. Second, the state will need to appropriate new spending to go towards stabilization grants that increase in size over the next five years – Reaching Higher estimates the state will need to spend around $2.2 million in year 1 and around $10.1 million in year 5. Finally, the state will need to appropriate new spending to support students currently in private schools who select a voucher – Reaching Higher estimates this amount could be around $2.6 million annually.

The loss of state aid in year one is the most immediate impact for districts. Although for its analysis Reaching Higher assumed 3% of eligible students will select a voucher (based on the experience of comparable programs), it identified 40 school districts that will lose significant funding with an adoption rate less than 3%. Manchester, for example, will lose approximately $430,000 in state aid (equal to ¼ of 1% of its 2017 voted appropriations) if only 1.03% of its eligible students select a voucher. Similarly, Nashua will lose approximately $407,000 in state aid if only 1.60% of its eligible students select a voucher.

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Additional Key Considerations

 

Special Education:

 

SB 193 states that selecting a voucher has the same effect as “parental placement” under the Individuals with Disabilities Education Act (IDEA). This means that parents and students waive their rights under IDEA (and other federal laws) and receive significantly different treatment under state and federal law. Over 16% of public school students in New Hampshire receive special education services. Accordingly, parents, students, and policy-makers will benefit from understanding the potential impact on special education.

Among the multitude of ways in which parental placement affects special education, the most significant are the loss of civil rights protections and the transition from individualized services to pooled, budget-dependent services. State and federal laws require public schools to provide students with disabilities with specific services and supports (as outlined in each student’s individualized education program [IEP]) necessary to ensure the students receive a free, appropriate public education (FAPE) in the least-restrictive environment (LRE). Students and families in public school also have due process rights to appeal or contest decisions that affect the students’ educations. These rights and protections do not apply in situations of parental-placement.

With parental placement, students no longer have a right to an IEP and instead receive a service plan that outlines supports the local public school will make available to the students. The services available in parental placement are not required to be individually-tailored – for parental placement, public schools must allocate an amount of their federal IDEA funding that is proportional to the number of parentally-placed students relative to the total number of students with disabilities. Decision-making with respect to services ultimately rests not with families but with the local schools.

According to a recently-released report from the U.S. Government Accountability Office (an independent, nonpartisan agency) the experience of programs comparable to SB 193 in other states indicates parents of students with disabilities may not be aware of the manner in which their student will be treated differently under parental placement. This is relevant in New Hampshire as SB 193 does not require the Department of Education or scholarship organization to provide a briefing for parents and students outlining the differentiated treatment and ensuring all decisions are made with full knowledge of the potential outcomes.

Academic Accountability:

SB 193 contains accountability requirements that appear to be in contradiction with each other. The bill seems to compel any student who selects a voucher to take the annual statewide assessment (as defined in RSA 193-C:6). However, the bill also contains language indicating that the accountability requirements for vouchers students could be satisfied with an annual portfolio review and one other measurement tool agreed upon by the parents, the Commissioner of Education, resident superintendent, or private school principal. This issue complicates efforts to assess related potential academic impacts.

Where students selecting a voucher are required to take the annual statewide assessment, shareholders are able to evaluate and compare academic results to ensure students are realizing their learning goals. This is not the case when such a statewide assessment is not used.

Public Oversight:

Reaching Higher estimates that if 3% of eligible students select a voucher, scholarship organizations will receive over $375,000 in public money every year for administrative expenses. SB 193 establishes an eight-member oversight commission. Included among the commission members, is “the administrator or chief executive officer of the scholarship organization...”. This may impact the overall rigor and nature of that oversight. Finally, the bill does not prohibit board members and/or staff of scholarship organizations from having financial interests in educational providers (e.g., private schools, education technology programs, and tutors) eligible for public dollars.