Committee backs tax credit that aids students

Last modified: 11/9/2011 12:00:00 AM
A committee of legislators is supporting a tax credit program that would give businesses an incentive to donate money to be used exclusively to fund education options for New Hampshire students.

The money donated by the companies would then be doled out to families seeking alternatives to public school - whether that is home-schooling, private schools or religious schools.

The group, led by Sen. Jim Forsythe, a Strafford Republican, studied tax credits instead of vouchers because the credits look more likely to stand up to constitutionality tests, he said. Forsythe ran for office as a supporter of expanding school choice.

'With tax credits, it's not government funds. It's not money the government ever had control over, so doesn't require the same regulations,' he said.

The committee's recommendations, issued in a report last week, are that the state should allow businesses to donate up to a certain amount of money to educational scholarship funds, and receive a tax credit of between 75 and 90 percent for that donation.

The credit would be against that company's bill for the annual business profits tax, though the committee was open to applying it to the business enterprise tax as well, depending on how other reforms of that tax shake out legislatively.

The committee didn't recommend what the limit should be on how much individual companies can donate as part of the credit program, but it did recommend a limit of between $10 million and $15 million in donations total.

Families that choose to home-school would be allowed to apply for a scholarship to cover the cost of books and materials 'with a reasonable cap,' according to the report.

The state should still provide funding for students in need of special education services, however, the committee wrote. The $1,856 the state currently provides for each special education student should be included in any scholarship, but the school that child attends should have to prove the money was used for educational services, the group recommended.

The report also recommends capping the administrative expenses of the fund at an as-yet-undetermined percentage of the scholarships.

The committee is due to continue meeting for another year, when it will examine a tiered approach to the credits, either offering businesses a different percentage credit the first year they donate or changing the percentage of the credit after the funds reach a certain threshold of donations. The committee also plans to look at how to handle scholarships for existing private school students without adding costs to the budget.

In the meantime, the group could find itself proven redundant by new legislation inspired by the interim recommendations.

House Majority Leader D.J. Bettencourt of Salem has begun drafting legislation that would create the tax credit program as early as next year, Forsythe said, adding that he has also submitted a legislative service request for a similar Senate bill, but may wait and follow the House version instead.

(Sarah Palermo can be reached at 369-3322 or

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