Under the program an individual or business could donate up to $1,700 to a Scholarship Granting Organization, although currently no organization has signed up for the program as the rules are still being written by the Internal Revenue Service. The program would not begin until 2027.
In announcing the state’s participation in the federal tax credit program Gov. Kelly Ayotte said the new program is a way for the state to continue investing in educational opportunities for its students.
“We want every child across our state to be in the learning environment that best fits their needs, and this tax credit opportunity will help give families that choice and provide tax relief to individuals and businesses,” Ayotte said in a press release announcing the decision. “We will continue working to provide a best-in-class education for our kids and ensure students, teachers, and their parents have the resources they need to thrive.”
The state currently has a Business Education Tax Credit program that allows businesses to donate to a scholarship program for lower-income families that last fiscal year received donations of $2.3 million that Children’s Scholarship Fund NH administers and granted scholarship to 777 students.
The federal program for individuals and businesses, would allow donations to be made to Scholarship Granting Organizations capped at $1,700 per year for the credit.
The state business education tax credit program caps donations at $1million a year and the donor receives a tax credit for 85 percent of the donation.
The federal initiative allows New Hampshire residents and businesses to donate to a Scholarship Granting Organization instead of paying the money to the government in taxes.
The New Hampshire program would benefit state students through tuition payments to a private or religious school, tutoring for public school students, services for students with disabilities or other education related services and products.
The tax credit program will ensure state residents’ and businesses taxes are spent in New Hampshire on educational programs, supporters note.
“By participating in this program, New Hampshire continues to be focused on ensuring students have access to the supports that help them thrive,” said Department of Education Commissioner Caitlin D. Davis. “The Federal Education Tax Credit program offers families additional flexibility to access educational resources and services aligned with their children’s needs.”
Kate Baker Demers, the Executive Director of Children’s Scholarship Fund New Hampshire, which also administers the state’s Education Freedom Account Program, said the federal program will provide additional financial support for the state’s educational choice network.
She said the governor’s decision to join the federal program reflects a steady and pragmatic approach to education policy that recognizes students learn in different ways and often rely on different supports at different points in their academic journey.
She said her organization has received requests for EFA grants from students in public schools seeking tutoring, but cannot award them grants under the law because they are in public or charter schools.
“This program reflects how education works in real life,” said Baker Demers. “New Hampshire families do not fit neatly into one educational category. Some students need tutoring while remaining in public schools. Others need tuition assistance or specialized services in different learning environments. The federal education tax credit builds on the strong foundation New Hampshire has already established and helps ensure more students can access the support they need.”
She said her organization appreciates Gov. Ayotte’s leadership in opting into the program and for her continued focus on policies that put students and families first.
She also recognized commissioner Davis’s emphasis on aligning educational resources with student needs and ensuring responsible implementation.
She said her organization did not initially sign up to be a Scholarship Granting Organization and awaits the rules and guidelines being developed by the IRS and the Department of Education.
But a CSFNH press release noted the organization’s experience in the area.
Baker said the federal tax credit program would have to be separate from the state business tax credit scholarship program.
While the state wants to expand the scholarship programs, state lawmakers have yet to respond to two education funding lawsuits that determined the state has failed to meet its constitutional obligation to provide its public school students with an adequate education and to pay for it.
In the ConVal suit, Judge David Ruoff, ordered the state to begin paying the full cost of an adequate education, which would increase state support by $500 million a year, the state Supreme Court said the legislature could not be forced to do that, although it upheld Ruoff’s finding that the state has failed to pay for an adequate education which forces local property taxpayers to pick up the difference.
Local property taxes have varying rates, while the state constitution requires state taxes to have uniform rates, which is why having local property taxes pay for an adequate education is unconstitutional.
Ruoff’s opinion on the Rand lawsuit was similar and also found the state has not paid its required share of special education costs as well.
Several bills in the last and current legislative sessions would have brought the state into compliance with the ConVal ruling, but were defeated by the Republican majority.
The state’s Education Freedom Account Program this school year had no cap on a family’s earnings and nearly doubled from 5,765 students to 10,510 and increased in cost from $30.4 million to $52 million.
All but 7 percent of the additional students this school year were in non-public schools, such as religious and private schools and homeschool programs or are just entering school age.
A bill this year would remove the cap for the next school year which would be 12,500 students.
Garry Rayno may be reached at garry.rayno@yahoo.com.
