Republicans voice support for expanding 'education freedom account' program

Nearly two years after creating the “education freedom account” program, a growing number of New Hampshire Republicans are looking toward expanding who can access it.

During an Oct. 25 Bulletin/NHPR debate, Gov. Chris Sununu said he would support raising income caps on the program. In a Tuesday WMUR debate, he repeated that position. And one Republican lawmaker has already filed two pieces of legislation to do it.

“I would be open to expanding it if (lawmakers) want to do that,” Sununu said at a press conference Wednesday. “It’s because there’s such a high demand. We’ve created a product – we’ve created an opportunity for families, and more families than we anticipated want it.”

Any increase in income limits would be a transformative expansion for the program. And any effort to do so will likely reignite fierce ideological debates over the program – regardless of who controls the State House.

Created in 2021 as part of the two-year budget, the EFA program allows parents to access a portion of public education funds and use them toward nonpublic school expenses such as private school and home-schooling costs. Families that participate receive the per-pupil adequacy grant that would have been given to their local public school, which averages around $4,600 per student.

The program is currently targeted toward lower-income families: Families must demonstrate that they make below 300 percent of the federal poverty level in their first year. This year, that level is about $83,000 for a family of four.

Now, after a higher-than-expected initial take up, Republicans are proposing raising that income cap. A bill filed by Rep. Alicia Lekas, a Hudson Republican, would raise the cap from 300 percent to 500 percent of the federal poverty level – increasing the limit for a family of four to about $139,000.

A separate bill filed by Lekas for next year would remove the income limits entirely.

“It’s saying, OK, the state is paying X number of dollars per kid,” Lekas said in an interview. “Why can’t it go to every kid? Why are we singling out some kids for getting money from the state and not other kids?”

Even when narrowed to low-income families, the EFA program has been politically divisive. Conservatives and “school choice” advocates have said the program – one of the most expansive in the country – provides financial opportunities for students who are struggling in their public school who want to explore a nonpublic school option. Opponents of the program, who include Democrats and public school advocates, say that it is burdening the state’s education funding system and note that a majority of families who are receiving the funds never participated in public school.

In its first two years, the program has exceeded initial participation projections. About 1,600 students signed up for the 2021-2022 school year; this year that number has nearly doubled, to just over 3,000.

Republicans like Lekas say that the take-up rate indicates high demand for the program. Expanding the income threshold could help families who might be facing financial constraints but are just out of reach of receiving the funds, Lekas said.

“I know that there are families who were looking forward to it, who were counting on it, and then found that their income level was just a little bit too high,” Lekas said.

To Lekas, any income cap for the program is a compromise, because any cap necessarily leaves some families making slightly too much money to qualify. Lekas prefers removing the income cap entirely; she filed both bills to test out different approaches.

The key target group, she said, are middle-income earners.

“Once again, we’re the middle class and we get left out of everything,” she said. “And we can’t afford to send our kids any place. We can’t afford to do these extra things for our kids. And yet, we don’t get the (public) money either, but we pay the taxes.”

Democrats, meanwhile, say the program already is too big a drain on the state’s Education Trust Fund, which spends about a billion dollars a year toward public schools.

They argue that opening up the program to families who never participated in public school means the state is now paying adequacy aid to students it never would have otherwise. In some states with similar programs, such as Arizona, the school choice accounts are limited to students who are in public schools and want to leave them.

And they say that increasing the income threshold will open the program to a new group of Granite Staters who also do not participate in the public school system. That could prompt an outpouring of new state spending.

“It would be reasonable to expect that any family who would qualify at 300 percent or at 500 percent would apply for the voucher,” said Rep. Dave Luneau, a Hopkinton Democrat on the House Education Committee. “I mean, why wouldn’t you? It’s five, six, seven thousand dollars. Why wouldn’t you apply for the voucher?”

He added: “We’re not talking about students who are exiting their public schools to go to private schools. We’re talking about our neighbors down the road, who send both their kids to Derryfield.”

Exactly how much an expansion of eligibility to 500 percent of the federal poverty level might cost the state is not known. The state’s Legislative Budget Assistant calculated that under the program’s current income limit, if every eligible student used EFAs and every student received the maximum benefit possible, the state would be liable up to $70 million per year, Luneau said. That’s a hypothetical, nearly impossible upper limit designed only to demonstrate the state’s potential total exposure.

Meanwhile, expanding the EFA program could run into political hurdles – even if Republicans maintain control of the State House. Earlier this year, the Republican-led Senate rejected a House-passed bill to raise the income limit on the state’s Education Tax Credit program – which funds scholarships for nonpublic school units – from 300 percent to 500 percent of the federal poverty level, which is funded through business taxes.

But that program has a different structure than the EFA program and has more limited funds. Senate Republicans argued that raising the income limit for the tax credit program would mean that lower-income families would have fewer opportunities to receive the set amount of funds.

Whether or not Republican lawmakers’ hesitation would apply to the EFA program – which does not have any financial limits built into the statute – is not clear.

While Sununu has said he would support raising the income caps, he has not specified what proposals he would support – whether an increase in the cap or the elimination of the cap entirely.

“I haven’t looked at either of those bills, so I wouldn’t say if I would support (them) or not,” he said. “But I think it should have a robust discussion, but look at the data too. Who are the families, where they from, what other accountability metrics are we gonna put into the system?”

Luneau said the entire program is flawed and should be repealed. And he disagreed that the program is opening new opportunities, pointing to the low proportion of beneficiaries who are actually leaving public schools.

“As you continue to raise the limit, the program is not opening new doors,” he said. “But it’s essentially getting the state into the business of paying private school tuition.”

But Lekas argues that families on the higher end of the income spectrum would not necessarily use the funds, given that they already have the means to send their children to high-tuition private schools and don’t need the burden of applying to receive the state funds.

And, she said, the program should be expanded as a matter of basic fairness to taxpayers.

“Why should some people be cut out of things that others can get?” she said. “They all pay taxes, right?”

This story was produced by the editorially independent New Hampshire Bulletin, which is part of States Newsroom. Contact Editor Dana Wormald for questions: info@newhampshirebulletin.com.