New Hampshire's Back-Door Religious School Subsidy Is Challenged in Court

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When Tom Chase received an email last year from Americans United about a scheme that will divert public funds to religious schools in his home state of New Hampshire, he was none too pleased.

"The thing that seems to escape the people who propose, pass and fight for these laws," Chase told Church & State. "is that the state participating in religious activities through funding or any other overt (or covert) methods means that some religions are being supported more than others. I don't think the state should be doing that."

Chase, an electrical engineer who has two children attending public schools, is one of eight plaintiffs in a lawsuit filed last month by Americans United, the New Hampshire Civil Liberties Union and the American Civil Liberties Union Program on Freedom of Religion and Belief challenging the constitutionality of the New Hampshire Education Tax Credit Program (ETCP).

The three civil liberties organizations told the Strafford County, N.H., Superior Court that the program unlawfully diverts taxpayer funds to religious schools. Because there will be no state oversight of the schools receiving scholarship monies, the lawsuit asserts, religious schools will be able to use the funds for religious instruction and discrimination.

The ETCP, which took effect on Jan. 1, allows businesses to reduce their tax liability by receiving an 85 percent tax credit in exchange for donations made to K-12 scholarship organizations that pay for tuition at religious and other private schools. It allows up to $3.4 million in tax credits to be claimed in the first year and $5.1 million during its second year. Additional increases can occur in subsequent years.

"This program is an attempt to circumvent the law, and it is doomed to fail," Alex J. Luchenitser, associate legal director at Americans United and lead counsel in the case, told Church & State. "The New Hampshire Constitution plainly bars this cockamamie scheme."

The tax-credit program has been under fire from Americans United for over a year.

AU Legislative Assistant Emily Krueger noted in January 2012 on AU's legislative blog that "there is no meaningful difference between tax credits and direct government reimbursement of private and religious schools." Either way, she said, public funds are being put to use by private religious organizations.

Krueger added that tax credits and school vouchers are not real reform because they do not improve education; instead they divert money away from public schools while failing to boost academic achievement for the few students who receive the vouchers.

Multiple studies of school voucher programs in Washington, D.C., Milwaukee and Cleveland have shown that voucher students who attend private schools perform no better in reading and math than students in public schools, Krueger said.

In April, Americans United again expressed concern with the proposed New Hampshire program, this time through a letter to lawmakers explaining the potential harm it would do to public education as well as the constitutional issues that would arise.

"We oppose this tax-credit scheme because it is nothing more than a back-door voucher system, and has the same constitutional flaws inherent in voucher systems, as they are both subsidized by the state," then-AU State Legislative Counsel Amanda Rolat wrote. This bill violates the New Hampshire Constitution and represents misguided education reform policy."

Those who backed the bill, however, did not heed these warnings.

The Heartland Institute, a Chicago-based think tank, said the tax-credit ploy was the product of both the libertarian Cato Institute and the New Hampshire-based Josiah Bartlett Center for Public Policy, a free-market think tank.

Bartlett Center President Charles Arlinghaus called the ETCP "probably the best school choice bill we've had at any time in the past 20 years. …