Ep. 145: Choice in the States – New Hampshire with Kate Baker

October 29, 2019

Kate Baker, director of the Children’s Scholarship Fund of New Hampshire, discusses the state’s tax-credit scholarship program. Learn about the program’s legislative journey, and how it’s different from other tax-credit scholarships across the nation.

Jason Bedrick: Hello. This is Jason Bedrick, director of policy at EdChoice, and today we are going to explore New Hampshire as a part of our school choice policy series. New Hampshire has two educational choice programs. One was enacted in 2012. That’s their tax-credit scholarship program. The other technically enacted in 2017 is a town-tuitioning program, although as we will discuss later in this episode, defacto, the program has been operating for more than a century. We’ll hear a little bit more about that. I’ll be joined in just a moment by Kate Baker. Kate is the director of the Children’s Scholarship Fund of New Hampshire. We’re joined now with Kate Baker.

Kate, thanks for coming on.

Kate Baker: Oh, so happy to be here with you.

Jason Bedrick: As I mentioned, you run the scholarship organization, Children’s Scholarship Fund in New Hampshire. It operates as a part of the state’s tax-credit scholarship program. Could you tell us a little bit about how it works?

Kate Baker: Sure. The legislature passed the tax credit here in New Hampshire in 2012, and on January 1, 2013, we started the scholarship organization. In New Hampshire, a business or individual can get a tax credit of 85% against their business enterprise, business profits tax, or for an individual, interest and dividends for donations to scholarships for low- and middle-income families in New Hampshire.

Jason Bedrick: How many families are you aiding right now?

Kate Baker: At Children’s Scholarship Fund this year, we have 281 children at 49 schools. We also have 55 homeschoolers. In total, since the inception of the program, we’ve been able to help 615 kids in New Hampshire. I will tell you, I think I have the best job in New Hampshire for sure.

Jason Bedrick: No doubt. How much are scholarships worth?

Kate Baker: Our scholarships are capped as an average, and so we can help an individual family based on their need and income. The scholarship average for all of us in the whole state is around $2,700. That includes our special needs scholarship, which they legislated that amount, and this year, that amount was $4,833. So, if you’re a child who has special needs, you do get a higher scholarship from us, which the families who have those children, I mean, think about it, these are your families who are low-income and have special needs kids. I mean, they need as much help from us as they can get. We really do enjoy those scholarships.

Jason Bedrick: New Hampshire’s tax-credit scholarship is unique. It’s different from the other 17 tax-credit scholarship programs around the country in terms how the scholarships can be used. Can you tell us a little bit about that?

Kate Baker: Yeah, our home-schoolers. Sure. You can use our scholarship for a range of things, not just, I mean, many families do use it for private school tuition, but we also have children participating in online ed. A good example of that is one of our home-school scholarships. It technically is a home-schooler, even though it’s fully enrolled and a school child participates in the Stanford Online School—Stanford Online High School. That’s really exciting. People also can purchase their curriculum for home schooling or services if their special needs child, for example, with their special needs child that they needed OT or speech therapy, they could use our scholarship to do that. We’ve seen some amazing uses of this really customizing education to meet the child’s needs. It’s really exciting that we’re able to do that, really open doors for families here in New Hampshire so that they can really customize their education for their child.

Jason Bedrick: Absolutely. Now, as a part of our new school choice policy series, we are giving our listeners not just an overview of how the programs work, but we’re also getting into a little bit with the history of how the program was enacted, the challenges that they faced, legal battles, that sort of thing. Could you give us maybe an overview?

Kate Baker: Yeah, we had some real adventures here in New Hampshire, some really deep discussions about the policy and the constitutionality of it, discussions in the legislature. There were repealed bills for the first five years, and then finally, people stopped trying to repeal it and realized, “Oh, wait, this is actually helping children. We should just leave it alone.”

There was also court, two levels—the Superior Court and the New Hampshire Supreme Court. At the Superior Court level, the judge actually ruled that we could continue operating but that we couldn’t give scholarships to children to attend religious school. I thought that was pretty shocking because it looked an awful lot like discrimination to me. I remember feeling like I’ve never discriminated against someone in my life, and I don’t want to start now, so we did appeal that with the help of The Institute for Justice to the New Hampshire Supreme Court.

In the New Hampshire Supreme Court, they did do the same thing, I think, that the U.S. Supreme Court has done, which is rule on standing because in this tax- credit program, just because you take a deduction or a credit on your taxes doesn’t make it someone else’s money, and it definitely doesn’t make it the state’s money. It is, in fact, the donors’ money that they are donating to the scholarship organization, and so it is private funds. The court ruled that same way that the U.S. Supreme Court ruled that the plaintiffs didn’t have standing to bring the case again on the basis, in my opinion, because it’s private money.

Jason Bedrick: That’s right. The law had been challenged under new Hampshire’s Blaine Amendments, which as we know the Blaine Amendments are these historically anti-Catholic amendments that the Know Nothing movement succeeded in sticking into these state constitutions primarily to prevent Catholics from having access to funding for their schools, even though at the time, the so-called “common schools,” which are sort of the forerunners of what we call public schools today, were teaching the Bible. They were leading prayer in a way that was essentially nondenominational protestant. When the Catholics tried to access funding for their own schools, the protestant establishment added these Blaine Amendments to prevent them.

The Blaine Amendment essentially says that public funding will not be used for sectarian schools. But you’re right, even though the lower court judge said, “Well, the program itself is constitutional, but the funds can’t go to a religious school,” the state Supreme Court said, “Well, actually, you’ve got private donors that are citizens that are making, or businesses that are making donations to private scholarship organizations. Then the funds are flowing to families to use at private schools. At no point are these funds entering the treasury.” So, the other side could not prove any harm from the program, so they said, “You don’t actually have standing to sue.”

Kate Baker: Right.

Jason Bedrick: But let’s back up even a little bit more even before the lawsuit. Who were the people that were pushing for this law? How was this law enacted? What was the opposition that you were facing in the legislature?

Kate Baker: Well, in New Hampshire, when you bring a new idea to the legislature, you might as well just shake the legislature, tip it upside down, and flip it back over. In New Hampshire, we are really traditional. We like things the way they are. We’re not fans of new ideas, and so whenever you have a new idea in New Hampshire, it is a challenge. In addition, we have a legislature with 424 members, and so the third largest legislative body, what, on the earth—

Jason Bedrick: In the—

Kate Baker: … I think?

Jason Bedrick: In the English speaking world.

Kate Baker: Yes, exactly. Yeah. It’s very—

Jason Bedrick: Full disclosure for our listeners, I was a member of the New Hampshire state legislature, but as Kate noted, given its size, I mean, like one in 10 people in the state, at any given time, are legislators, so it’s not as impressive as it sounds in other states.

Kate Baker: We love that it’s a citizen legislature—

Jason Bedrick: That’s right.

Kate Baker: That the legislators are your neighbors and they’re regular people from New Hampshire, but that also means that when you bring—

Jason Bedrick: And they only make $100 a year.

Kate Baker: Right. When you bring a new idea to them, it does take a good bit of time to be able to share the information. Absolutely. The legislators, Representative Greg Hill and Senator Jim Forsythe did work very hard on making sure everyone understood what this was and how it would work. It did pass the House and the Senate, and then the governor at the time, Governor Lynch, did veto the law.

Jason Bedrick: That’s right.

Kate Baker: The bill, and then it went back, and the legislature actually overrode the governor’s veto.

Jason Bedrick: Right. Now, when it initially passed, it passed with a simple majority, but in order to override the governor’s veto, it required a super majority. What changed in the interim to—

Kate Baker: You’re taking me way back.

Jason Bedrick: Yeah, to flip a whole bunch of the votes.

Kate Baker: I think it was collaboration and some compromises in the bill that made it so that more people could support it. In addition, there was a lot of families interested in the program and people in the community calling their legislator, talking to them about how families need more education opportunities in New Hampshire. It felt like, I don’t want to say it was like surfing a wave, but it did feel like it was a groundswell of support for the idea in addition to the legislators really working on making sure that they compromised so that it could be agreeable to more people.

Jason Bedrick: It was a combination of legislators internally collaborating with each other and reaching compromises that everybody could live with, but also outside pressure from activists, the grassroots from families who wanted to be able to benefit from school choice, and the combination of the outside pressure and these internal negotiations produced something that was able to achieve a supermajority in both legislative chambers and then override the governor’s veto.

Kate Baker: Well, and what I found too from running this program is it is a very New Hampshire school choice program. That might’ve been part of it also is that the people of New Hampshire were working together to create this. For example, having a program that’s entirely voluntary. A business chooses to contribute and take the tax credit to help children, the children choose to participate. That’s a very New Hampshire way of thinking. If people like it, it will grow. If people didn’t like it, it wouldn’t have done anything. That’s kind of our mindset here a little bit.

Jason Bedrick: That’s right. Live free or die.

Kate Baker: That’s right, how the people think here. For me, it is a good fit for New Hampshire, this education tax-credit program. This year in tax-credit donations by August—the end of August, September 1 or so—we did a reach $1 million in the tax-credit program, which is great. For such a small state growing each year by 25 or 50%, it’s been a really, really fun and incredible a job to do here.

Jason Bedrick: Now, you mentioned that you passed the law, you’re able to override the governor’s veto. It survives multiple repeal attempts, and then it survives a lawsuit.

Kate Baker: Yes.

Jason Bedrick: That goes all the way up to the state Supreme Court.

Kate Baker: Right, right. I had no idea, too, when I started the scholarship organization that it would even be controversial. I thought, “OK, great.” I’m from Manchester. I grew up a free-reduced lunch kid in kind of a poor neighborhood, and I felt like I wanted to do this work to help the children, help my people, and so for me, I came into it with this purity of heart, which was just fabulous at the time because I really just wanted to help kids. Then come to find out, “Oh, wait. This is controversial? Somebody thinks this isn’t a good idea?” So, it was a really interesting experience at the time to have those discussions, the discussion for example about public money, public… and I’m still to this day being like, “These are private contributions.” It’s been very interesting. It’s a discussion, really, about, in New Hampshire about buildings, like are we talking about buildings and education infrastructure or are we talking about kids? It’s been a really, really interesting adventure.

Jason Bedrick: Kate, let’s talk a little bit more about what are the arguments the other side was making, who is making these arguments against the program, and how close did they actually come to repealing it?

Kate Baker: Well, it was interesting because New Hampshire, we’re really a swing state, and so we can have Republican majorities in the House and the Senate, or in the governor’s seat, and then two years later have it be a Democrat majority. One of the repeal attempts actually went through and passed in a controlled House that was controlled at that time by Democrats, but in the Senate, there was a Republican majority, and they traditionally do support these programs in New Hampshire. It was, in fact, one senator who decided that now that it was existing law she could support it whose vote made it so that they weren’t able to repeal the law.

Jason Bedrick: That was Senator Nancy Stiles. In 2012, when they enacted the law, she had voted against it, but then the opponents of school choice actually had a majority. It’s true, there were Republicans and Democrats on both sides of the issue, right? I mean, they were in both the House and the Senate, or at least in the House, there were Republicans and Democrats on both sides of the issue. Senator Stiles had voted against it, and then a year later after they successfully passed a repeal in the House, it appeared that they had the votes to do so in the Senate and that the governor would then sign the repeal. This would’ve been the first school choice program ever legislatively repealed, but that didn’t happen because one senator switched her vote. How did that happen?

Kate Baker: It was a discussion, I think, with her because her background actually was helping low-income children, and I think that when she realized that this program was targeted to low- and middle-income families, particularly free and reduced lunch kids to be able to make it so that they could have more opportunities, I think that was really what made her change her mind.

Jason Bedrick: In terms of activist groups and things like that, not necessarily just parties, who were the people that were opposing the program and what were they saying it?

Kate Baker: Oh, man. I know, for example, that the people that sued the state to take the law to court—

Jason Bedrick: Right. That was Bill Duncan and—

Kate Baker: Yeah. The American Civil Liberties Union, all the teachers unions in New Hampshire, which we have a large group of teachers unions just like every state, and an organization that was for the separation of church and state. That was… it’s the same people that oppose it in New Hampshire that oppose it everywhere. I think people that want to maintain the status quo in education and don’t want families to be able to drive their children’s education or customize. I mean, really it’s 2018. You can learn anywhere, and it’s probably time for us to start thinking like that as a society. The thing that frustrates me is… Let me share one thing with you.

Jason Bedrick: Sure.

Kate Baker: The thing that frustrates me when I go to Concord is people that send their children middle- or upper middle-income people who send their children to private school, but then oppose programs like this. That may be the most frustrating piece of the legislative, the political side of things. It’s most shocking, so to speak. It doesn’t make any sense. You send your kid to private school, but a low-income family shouldn’t be able to do the same thing?

Jason Bedrick: Right. Choice for me, but not for thee.

Kate Baker: Yeah, it’s shocking. Yeah. That’s shocking. I still am shocked by that to this day even after doing this work for whatever, seven years. It’s still shocking.

Jason Bedrick: New Hampshire also has a very new school choice program, but in another sense, it’s also a very, very old school choice program. Could you tell us a little bit about the town tuitioning program and situation in Croydon?

Kate Baker: Yeah. I’d love to. Again, something that I think was already OK to do, the town of Croydon, their school board enacted a policy that, because they only have a little tiny little K-4 school that has about what, 20 kids in it or something like that, they wanted to make it possible for the kids after they graduated from the fourth grade to be able to choose a neighboring towns, public school or a private school. They put that into their local policy that you could do that. Of course, that ruffled all kinds of feathers, and they also went to the courts to discuss that about the constitutionality of it. They did end up making it so that a child can choose a school that is non-religious because it seemed to me like they didn’t want to fight that battle.

But it really is an interesting model where the town is saying to the families, “You can choose from these schools instead of just assigning the children to one school,” which, of course, that’s always better when a family has more choices rather than less. They do also express that it is a cost savings. The area private schools, they are paying the town the amount that they otherwise would pay for a child to attend the public school, and they do get to pay less when the tuition is lower, so there is a particular school in that area children are choosing that the town is saving money by the children attending that school rather than the area district. That’s been a really interesting thing to see. I know they’ve been having people move to the town so that they can participate in the program.

It functions not only as a, of course, creating education opportunities for the children, but also economic development. It’s increased their property values, and people want to move there, and there’s a lot of discussion on other school boards about should they be doing that or can they do it. Again, I think it’s already could have been done. For example, there’s 51 programs in New Hampshire for special needs children that districts already do out-of-district placements, too, and they’re private. There’s a lot of private programs. For me, I was kind of looked at what they wanted to do in Croydon and thought, “Yes, they could totally do that,” but they did again, it’ll also have to go to the legislature and the courts to be able to clarify that, in fact, they can do what they probably should have already been able to do.

Jason Bedrick: Some of our listeners may be a little confused that there’s a… you’ve got this town, and the public school is only grades one through four, s—

Kate Baker: New Hampshire’s teeny.

Jason Bedrick: Right, so for—

Kate Baker: We have to remember scope.

Jason Bedrick: … some context, in the 2010 census, there were fewer than 800 people living in this town.

Kate Baker: Yes.

Jason Bedrick: I mean, this is a tiny town, and there’s a whole bunch of these small towns in New Hampshire and of course in all sorts of other states.

Kate Baker: It’s adorable. You should come visit, everyone that’s listening. We’d love to have you during fall peeping season. It’s gorgeous here.

Jason Bedrick: Now, so one of the interesting things is Jody Underwood, I believe… Was she the chair of the school board?

Kate Baker: That’s right.

Jason Bedrick: She was the chair of the school board at the time. She later did a study for the Granite Institute in New Hampshire, that’s one of the New Hampshire think tanks, and was able to document how this practice that was so controversial in 2016 had actually been going on for more than 100 years where towns, without getting permission from the state legislature or the state Board of Education or the state Department of Education were just doing this on their own. They said, “Look, we don’t have enough citizens to maintain a whole school district.”

In many cases they would send them to the neighboring town. That’s very well-known, but in many cases, they would just… the town would use public funds that had been raised in the town, and they would send a child to a private school, in many cases, a religious school. This had been going on at least as far back as the late 1800s, but it still, it wasn’t clear in law, so the State Department of Education was trying to crack down on Croydon. How was the situation eventually resolved?

Kate Baker: Well, that’s a good question. It was resolved two ways. One is that the legislature did pass a law saying that they could, in fact, do that. I know they also did go through the courts as well. I think it was both things that made it quite clear that Croydon could do what they, frankly, what they wanted to do. In New Hampshire, we’re always talking about local control here. For example, most of our education funding is local from the towns, and so to me it made good sense that they could do that and have a town tuitioning and a school choice program in their town.

Jason Bedrick: Right. If I believe… so the lawsuit was first, and I believe it became moot when the legislature took action to clarify—

Kate Baker: Ah, yes. Yes. I think you’re right.

Jason Bedrick: … to say, “Absolutely this, this. We are going to allow this. This is for sure a lot.”

Kate Baker: That’s right.

Jason Bedrick: Because it was not exactly clear. There was no express permission in law, but it was not expressly prohibited in law either, and the legislature took action to make sure that it was clear.

Kate Baker: Expressly permitted, yes.

Jason Bedrick: Right. So, what’s next for educational choice in New Hampshire?

Kate Baker: Well, we’re already talking about an education savings account in New Hampshire. And, like I described to you earlier, a new idea in New Hampshire, it takes a while here for us to learn about something new. There are 424 legislators, but we did have an education savings account bill in our legislature last year that we almost passed. It was only five votes, and so I expect that conversation to continue in New Hampshire.

As much as we’re old fashioned, I think in terms of education, our governor has really been talking about customizing and innovation, and we do have quite a bit of innovation happening here—technical tech hubs and startups and things like that. And so, I don’t think it’s out of the realm of possibilities that New Hampshire will embrace education savings accounts.

If you look at our home-school scholarships, it’s a good example of how it could work. Yes, our home-school scholarships is a smaller scale, but nonetheless, it’s been able to show people what families do when they’re empowered with these funds. Our state adequacy dollars, I don’t want to say they’re low, but it’s a smaller percentage of the total education spending in New Hampshire. Most of our education spending is local, and so part of the discussion is, again, always about money and buildings and infrastructure, but that dollar amount is high enough to help a family, but not high enough that you can really argue that it hurts anyone. The local districts in New Hampshire, if a child goes to a private school or decides to do online ed, they still do keep all of their local funding, and those decisions are made by local school boards. I feel like we’ll be able to have that discussion, really good robust discussion in the legislature this coming year.

Jason Bedrick: As you mentioned, you came very, very close. You had a universal eligibility education savings account bill pass the New Hampshire State Senate. It had the support of the governor who said he would sign it if it got to his desk, and actually you worked very hard to make sure that it did pass. The House Education Committee and then later the House Finance Committee watered the bill down quite a bit, limited eligibility only to low-income families. Did a few other things to the bill in terms of putting a cap on the number of students that could participate, et cetera.

Kate Baker: Yeah, their discussion about the money thing was, “We want to know how many kids.”

Jason Bedrick: But eventually, I mean, it came very close at one point, just five votes shy of going forward in a body of 400 on the House side, so five—

Kate Baker: Yeah, that’s the thing to remember about New Hampshire is the number of legislators. I mean, it really is… and frankly, they’re real people with no staff, and so it is necessary to have authentic discussions here in New Hampshire about.

Jason Bedrick: If I recall correctly, they were between, I think, there were about 40 legislators that were absent that day, which is pretty typical for New Hampshire. That’s 10% of the body.

Kate Baker: I mean, they wrote about that in the news because was such a high number of people that happened to be missing. I mean, they are citizen volunteers. For example, if someone has to work, they might have to work on a day that they also might have to vote, but it would be good to have some better attendance for sure.

Jason Bedrick: The key is if you had a five-vote margin in other states, I mean, that’s not something you can overcome in a much smaller legislature-

Kate Baker: I see.

Jason Bedrick: And especially a professional legislature where you’ve got… legislators are generally showing up. It’s rare on a key vote that you’re going to have legislators who are absent to barring extraordinary circumstances. But in New Hampshire, you’ve got a citizen legislature, you’ve got a high degree of absences all the time. It was particularly high that day. I think it may even been north of 40, but a five-vote margin in the New Hampshire House is actually very small. If had been maybe a day later and you had a different group of people that were there or absent, it may have passed so you came incredibly close.

Kate Baker: Right. I mean, there was a lot. There’s a lot of support for the idea here in New Hampshire.

Jason Bedrick: Right, and this was on the first try with an ESA bill.

Kate Baker: Yeah, a lot of great authentic questions, logistic questions, how would it work, what type of mechanisms would you use to be able to enable the families to use the funds? I mean, great questions from the legislators about how the program would function, and the idea that we would create more education opportunities for families. We’ve been hearing from a lot of bullied kids who really do need an immediate solution, and having education savings accounts in New Hampshire could do that. It could make it so that if you were in a unsafe situation, you could go and get an education savings account, and then be in a safe situation. The legislators are thinking like that. They are seeing it for the possibilities that it could have for families.

Jason Bedrick: Well, you came very close. I’m sure you’re going to hit the ground running in the coming year, and we wish you the greatest success. Kate Baker of Children’s Scholarship Fund, thank you for coming on the podcast.

Kate Baker: Oh, thanks for having me.

Jason Bedrick: Thank you so much for tuning in to EdChoice’s school choice policy podcast series. For those who are interested in staying up to date on the school choice happenings in New Hampshire and in other states, you can subscribe to the podcast on SoundCloud, iTunes and Stitcher. You can also follow us on social media @edchoice on Twitter. You can also sign up for email on our website, edchoice.org. Thank you so much. See you later.