Okay, so given what we saw in Part 1, let’s consider what happens when a student leaves each of the two districts to open an Education Freedom Account (EFA).
In District 1, what changes? Things that change are highlighted below:
| Before | After | |
| Taxpayers | 1000 | 1000 |
| Students | 100 | 99 |
| Budget | $2M | $2M |
| Adequacy | $400,000 | $396,000 |
| Total valuation | $150M | $150M |
| SWEPT | 2/1000*150M=300K | 2/1000*150M=300K |
| SWEPT to adequacy | $300K | $300K |
| SWEPT to general | $0 | $0 |
| From trust fund | $100K | $96K |
| To be collected | $1,600,000 | $1,604,000 |
| Total local contribution | $1,900,000 | $1,904,000 |
| Total state contribution | $100,000 | $96,000 |
| Tax rate | 12.67/1000 | 12.69/1000 |
So, what happened?
The district still spends $2 million, because the kid leaving has absolutely no effect on the budgets for the schools in the district. No teachers are fired, no bus routes are cut, no facilities costs are reduced, and so on.
The difference is, $4000 that used to come from the state’s Education Trust Fund now comes from local taxpayers via an increase in the general tax.
The total amount of spending has increased — it stays the same for the district, and the cost of the EFA is added to that.
What about District 2?
| Before | After | |
| Taxpayers | 1000 | 1000 |
| Students | 100 | 99 |
| Budget | $2M | $2M |
| Adequacy | $400,000 | $396,000 |
| Total valuation | $250M | $250M |
| SWEPT | 2/1000*250M=500K | 2/1000*250M=500K |
| SWEPT to adequacy | $400K | $396K |
| SWEPT to general | $100K | $104K |
| From trust fund | $0 | $0 |
| To be collected | $1.5M | $1.5M |
| Total local contribution | $2M | $2M |
| Total state contribution | $0 | $0 |
| Tax rate | 8.00/1000 | 8.00/1000 |
So, what happened?
Again, the district still spends $2 million, because the kid leaving has no effect on the budgets for the schools in the district.
The difference is, $4000 of SWEPT funds that used to be applied to adequacy is now applied to the general tax. Instead of coming from the left pocket, it now comes from the right pocket, so to speak. Since no money was coming from the Trust Fund, the amount to be collected remains unchanged.
There are two things to notice here.
First, the idea that ‘money is following the student’ is nonsense. Now money is being spent in two places, instead of just one.
Second, it’s only in the district with lower total property valuation that the burden on local taxpayers is increased.
In addition, fewer than 30 percent of NH students who have signed up for EFAs were attending public schools. The rest were either being home educated or already attending private schools. In these cases, a student getting an EFA results in new spending by the state, with no change to spending by any district.
In all these cases, total spending increases. And all the spending is paid for by taxes (of one kind or another). Given this, it’s amazing that anyone can claim with a straight face that EFAs are ‘saving taxpayers millions of dollars’.
It reminds one of the old joke about the businessman who boasted that he ‘lost a little on every sale, but made it up in volume’.
