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N.H. Supreme Court hears dispute over education tax credit

Last modified: 4/17/2014 12:18:30 AM
The New Hampshire Supreme Court heard arguments yesterday about the state’s controversial new education tax law, which was struck down in part last year by a lower court judge who found that it unlawfully diverted public money to religious schools.

The law, enacted in 2012 over a veto by then-Gov. John Lynch, encourages businesses to donate to scholarship organizations that help students attend private schools, including those with religious backing.

Critics argue it strips public schools of crucial funding and inappropriately supports religious education. Advocates say it strengthens public schools through competition, provides more opportunities for low-income families and involves only private dollars as the money never passes through the government’s hands.

There seemed no clear consensus yesterday among the justices.

Justice Carol Ann Conboy seemed skeptical yesterday that the cash was anything but public. “The factual reality is,” she said, “without the credit, those taxpaying businesses would be obligated to pay the taxes to the state.”

The attorney general’s office and the Network for Educational Opportunity – the only scholarship group yet to receive money from the program – have each appealed the lower court’s decision. Associate Attorney General Richard Head argued that even if Conboy’s point is true, the state does not consciously direct money to religious schools.

“The family is deciding which school receives that funding at the end of the day, whether it be a public school in another district, whether it be a home school, or whether it be a private school, which could be either religious or otherwise,” he said. “The last decision maker is the family.”

But Alex Luchenitser, an attorney arguing against the law, said the program violates Article 83 of the state Constitution, which prohibits tax dollars from being spent on religious education. He said it shouldn’t matter whether the money is generated directly from taxes.

“This court’s decisions have repeatedly held that the state should not be permitted to circumvent the state Constitution by doing indirectly what it cannot do directly,” Luchenitser said.

If that is the case, replied Justice Robert Lynn, then what happens to smaller institutions or religiously affiliated programs that receive money through local property tax incentives?

Luchenitser said property taxes are different for several reasons, primarily because the state government is not involved. The education law, by contrast, he said, “takes money away from public schools, and it does so through a government program with lots of rules and regulations.”

Justice Jim Bassett asked Luchenitser whether his side would have a problem with the law if it still allowed the scholarship money to be used at religious schools, but only for nonreligious purposes.

Luchenitser said that would be infeasible, as “most of the religious schools in the state are permeated with religion.”

Lynn noted that students at religiously affiliated colleges can apply for federal loans and scholarships, and asked what the difference was. Luchenitser said universities, unlike primary or secondary schools – which the tax credit targets – aren’t often as infused with religious instruction.

Conboy asked several times whether the court should consider the practical ramifications of their decision. She cited a handful of court briefs that argued against the law because it, as she said, “would have far-ranging and, not to be overdramatic, but devastating effects on the public school system.”

Dick Komer, an attorney for the Network for Educational Opportunity, said the impact on the public schools is a decision for policymakers, rather than the court.

Luchenitser and the plaintiffs, which include former Executive Council candidate Bill Duncan, have asked the high court to overturn the lower court’s decision to leave in place scholarships for secular private schools, out-of-district public schools and home-schooling. They argue that lawmakers never intended for it to be severed. Justice Gary Hicks seemed in agreement.

“If we find that it is not fair and in fact unconstitutional as to a major component of its constituents, how can we not strike the whole statute down?” he said.

Inside the law

Under the law, businesses that donate to a scholarship organization can receive up to 85 percent of the donation back in tax credits. The money is used to give scholarships, averaging no more than $2,500, toward private school tuition.

A central criticism of the tax credit law has been that it requires 70 percent of scholarships to go to public school students. When a public school loses a student, it also loses a portion of state money – roughly $3,700 per student, Luchenitser said, citing a Department of Education estimate. That’s because most of a school’s costs are fixed.

Gov. Maggie Hassan, in a split from the attorney general’s office, has come out against the law. A court brief filed on her behalf in January stated that “the decision to contribute to a private religious school is a personal decision. It should not be supported by the state’s tax structure, and it should not have the effect of diverting scarce taxpayer dollars from crucial public needs.”

Families show support

Several families outside the courthouse yesterday said they supported the law because it promotes choice.

Esther Fleurant, a 35-year-old Concord mother of seven, said her school-aged children have always attended Christian private schools. This year she had to pull all but one of them out, because she could no longer afford the tuition. She’s now home-schooling the others.

“The kids learn much better,” she said of private schools. “They learn a lot more, they focus better – it’s just a better environment for the kids.”

Ricard Alexis, 50, of Nashua said he and his wife, Michelle, had all three of their children in public school. He said they weren’t interested in enrolling them in a religious school, but were interested in private schools and wanted to apply for the scholarships.

“We knew we couldn’t afford it,” he said of private education. ”But as parents we want to put our kids in the best situation as possible.”

Gilles Bissonnette, staff attorney for the New Hampshire Civil Liberties Union, which has opposed the law, said the question, however, isn’t about choice.

“No one disputes the notion that families have the right to send their children to private schools,” he said. “And that includes religious schools. But this isn’t really about that. It’s about whether public money can be used to support religious education.”

Komer, speaking after the hearing, said the point of the law, “like every school choice program, is to improve public schools by making them accountable through competition.”

“At the current environment, the only people who can afford to send their kids to private schools are the wealthy,” he said.

“These are small scholarships,” he added, “but they can make a big difference.”

Barbara Wilson, the headmaster at Cornerstone Christian Academy, a private K-8 school in Ossipee, said alternatives to public schools are scarce in southern Carroll County, where families are on average between 2 and 3 percent above the state poverty line. She said Cornerstone is the only private school in her district.

“If we accept that the way out of poverty or success is through education,” Wilson said, “then effectively the parents and the students of that area are being discriminated against because they’re not being given the same opportunity to funds that more affluent and more populous counties that can support more private schools have.”

(Jeremy Blackman can be reached at 369-3319, jblackman@cmonitor.com or on Twitter @JBlackmanCM.)


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