Right now, businesses contribute about one quarter of the state’s revenue in the taxes they pay, and coincidentally, public education comprises about one quarter of the state’s costs.
Unfortunately, the money the state is now siphoning away from its most productive citizens is being redistributed to an education system that is failing our children. Even as the state has devoted more hard-earned dollars to government-run education, 71 percent of the state’s public schools are in need of improvement, according to a report released by the State Department of Education in April. That doesn’t bode well for the prospect of more productive citizens in years to come.
An education tax credit bill that passed the Legislature, but was vetoed by the governor, presents a real opportunity to change the way New Hampshire conducts the business of education. If the governor’s veto is overridden by the Legislature, the bill would for the first time allow the free market to work in education—just a little bit—by giving children assigned to a failing public school a chance to attend a better school, whether it is a private school in their home town or a public school in a community nearby. This will forever improve these children’s chances for a more productive and prosperous life.
The bill accomplishes this novel goal by letting businesses decide how they want to spend the money they earned, rather than government taking it from them and redistributing it without their input. That’s part of the free market component to the idea, which gives businesses an opportunity to decide whether 100 percent of their Business Profits Tax or Business Enterprise Tax payments will continue to fund the broken public education system or whether they’d like up to 85 percent of that money to instead help financially strained parents send their children to a better school. Each business leader will have the opportunity to choose which course to pursue, and the state will actually save hundreds of thousands of dollars in the process, according to the State Department of Revenue.
Of the money that is ultimately collected on a first-come, first serve basis from participating businesses, an independent scholarship organization will determine which children receive help to attend the school of their parents’ choice, based on various metrics. This is another part of the free market component of the bill. Schools that do a better job educating children will attract more students, and the students the schools attract will receive a better education at a lower cost.
While each scholarship organization must give an average $2,500 scholarship to each student, the bill allows some children to receive greater than that amount and some less than that amount. This flexibility will help more parents make the decision to enroll their children in a better school and give them an opportunity they wouldn’t have otherwise had. And as the program showcases its successes over the years, as similar programs have in at least eight other states, future Legislatures will have the data needed to expand these opportunities to even more children.
It’s true, some communities could lose adequacy funding up to a fixed amount for their own public schools if several of their students receive scholarships to attend different schools, but therein lies yet one more free market component of the bill. Clearly, no school will want to lose students and the adequacy grants that go with them, so this bill will motivate failing schools to improve the quality of their education—without using additional money. On a small scale, the bill could create a situation where schools consistently improve relative to other schools to compete for students, all while keeping their costs low relative to other schools—again, to compete for students.
Experience has shown that public schools will not improve simply because the state spends more money to educate students the same way we’re educating them now. In fact, the quality of education has fallen as taxpayers have devoted more of their hard-earned money to the current system. The only way to successfully improve the quality of education is to change the dynamic of the system by allowing competition into the marketplace, and this education tax credit bill does just that.
By overriding the governor’s veto and providing children with real alternatives to poorly performing schools, school administrators at many of today’s failing schools will necessarily change their focus from raising as many tax dollars as they can to producing a quality service that satisfies their customers. In this case, those customers will grow up better equipped with the knowledge and skills they’ll need to be productive, and that will position them well to contribute to the educational excellence of the generation that follows them.