An analysis of school funding under New Hampshire’s open enrollment proposal 

New Hampshire lawmakers are considering legislation that would strengthen the state’s public school open enrollment law. House Bill 741 (HB 741) would establish cross-district open enrollment, allowing students to enroll in public schools statewide, provided school districts have available seats. The following analysis examines the implications of HB 741 for students and school district funding.

How open enrollment funding works in other states

Before open enrollment policies, which allow students to transfer to public schools with open seats, are adopted, state lawmakers often ask how the education funding will work. The answer is surprisingly straightforward in most states: just add transfer students to the receiving school district’s enrollment count. When this happens, the district receives the same funding it would for other students, such as those who move from another state or school district. Generally, this means additional state education dollars, while local funding remains unchanged.

Nearly every state that has adopted a strong open enrollment policy, including Arizona, Kansas, Florida, Oklahoma, and Arkansas, has done so without a funding provision.  

While the state funding generated by a transfer student is lower than a school district’s average per-student funding, it typically exceeds the marginal cost of serving that student, providing districts with additional revenue. That’s because school district costs don’t increase or decrease in direct proportion to enrollment.

For example, many schools can admit new students without hiring additional teachers, purchasing new curricula, or constructing new facilities. It’s only when enrollment reaches a tipping point—such as when classes are full, or a building runs out of space—that costs spike. That’s why every state open enrollment policy includes consideration for school capacity.

Capacity provisions take many forms but generally allow school districts to set transfer caps based on factors such as class size, grade-level capacity, program capacity, and building capacity. As a result, school districts aren’t required to accept transfer students if doing so would necessitate hiring new teachers, renovating buildings, or taking on other costly line items.     

How House Bill 741 deals with funding and capacity

Compared to other states, the open enrollment funding provided by HB 741 would be extraordinarily generous, more than compensating New Hampshire’s school districts for the marginal costs of serving incoming transfer students.

The bill requires students’ resident districts to pay the receiving districts at least 80% of the sending district’s average cost per pupil, as determined by the New Hampshire Department of Education (NHDE). Importantly, school districts would determine capacity for each school and grade level, allowing them to reject transfer applications if demand exceeds available seats. This means school districts wouldn’t be required to hire new teachers or renovate facilities to comply with the law, thereby keeping costs down.

While it’s unclear exactly what funding calculation NHDE would employ, its cost per pupil report, which reports districts’ operating expenditures with some modifications, provides important insight for policymakers. Using this data, which excludes education expenses such as construction, equipment, and transportation, it’s possible to estimate how much funding would follow transfer students across school district boundaries. These estimates are provided in Table 1 below.

Table 1: New Hampshire’s Estimated Transfer Funding Per Student by Sending School District

New Hampshire School District	Average Cost Per Student	Estimated Transfer Funding Per Student (80% of Average Cost Per Student)
Allenstown	$26,020	$20,816
Alton	$25,233	$20,186
Amherst	$22,258	$17,807
Andover	$21,185	$16,948
Ashland	$28,142	$22,513
Auburn	$15,135	$12,108
Barnstead	$18,272	$14,618
Barrington	$18,787	$15,030
Bartlett	$32,484	$25,987
Bath	$34,555	$27,644
Bedford	$18,498	$14,798
Berlin	$24,138	$19,310
Bethlehem	$25,353	$20,282
Bow	$18,395	$14,716
Brentwood	$21,591	$17,273
Brookline	$18,014	$14,411
Campton	$25,482	$20,386
Candia	$22,480	$17,984
Chester	$17,397	$13,917
Chesterfield	$24,143	$19,314
Chichester	$23,665	$18,932
Claremont	$23,288	$18,630
Colebrook	$23,007	$18,406
Concord	$23,159	$18,527
Contoocook Valley	$26,428	$21,142
Conway	$23,169	$18,536
Cornish	$30,960	$24,768
Croydon	$32,103	$25,682
Deerfield	$22,908	$18,327
Derry  Cooperative	$21,028	$16,822
Dover	$18,618	$14,895
Dresden	$25,950	$20,760
Dunbarton	$18,143	$14,514
East Kingston	$27,740	$22,192
Epping	$22,722	$18,177
Epsom	$24,415	$19,532
Errol	$30,355	$24,284
Exeter	$28,218	$22,575
Exeter Regional Cooperative	$23,934	$19,147
Fall Mountain Regional	$24,081	$19,265
Farmington	$22,655	$18,124
Franklin	$21,464	$17,171
Freedom	$35,275	$28,220
Fremont	$20,376	$16,301
Gilford	$23,377	$18,702
Gilmanton	$20,745	$16,596
Goffstown	$17,079	$13,663
Gorham Randolph Shelburne Coop	$22,360	$17,888
Gov Wentworth Regional	$24,370	$19,496
Grantham	$24,396	$19,517
Greenland	$23,439	$18,751
Hampstead	$26,754	$21,403
Hampton	$24,973	$19,979
Hampton Falls	$33,743	$26,995
Hanover	$25,447	$20,358
Harrisville	$33,932	$27,146
Haverhill Cooperative	$22,463	$17,971
Henniker	$22,023	$17,618
Hill	$20,430	$16,344
Hillsboro-Deering Coop	$24,482	$19,586
Hinsdale	$25,047	$20,038
Holderness	$28,890	$23,112
Hollis	$21,007	$16,805
Hollis/Brookline Coop	$21,086	$16,869
Hooksett	$19,285	$15,428
Hopkinton	$22,424	$17,939
Hudson	$18,577	$14,861
Inter-Lakes Cooperative	$31,987	$25,589
Jackson	$42,514	$34,011
Jaffrey-Rindge Cooperative	$20,656	$16,525
John Stark Regional	$21,047	$16,838
Kearsarge Regional	$25,964	$20,771
Keene	$19,378	$15,502
Kensington	$27,354	$21,883
Laconia	$22,815	$18,252
Lafayette Regional	$31,757	$25,405
Landaff	$22,556	$18,045
Lebanon	$26,624	$21,299
Lempster	$22,495	$17,996
Lincoln-Woodstock Coop	$31,584	$25,267
Lisbon Regional	$26,553	$21,242
Litchfield	$19,261	$15,408
Littleton	$27,866	$22,293
Londonderry	$20,741	$16,593
Lyme	$28,938	$23,150
Madison	$33,750	$27,000
Manchester	$17,734	$14,187
Marlboro	$24,212	$19,370
Marlow	$19,626	$15,701
Mascenic Regional	$19,736	$15,789
Mascoma Valley Regional	$24,646	$19,717
Mason	$21,107	$16,886
Merrimack	$21,512	$17,209
Merrimack Valley	$19,840	$15,872
Middleton	$19,773	$15,819
Milan	$19,366	$15,493
Milford	$20,765	$16,612
Milton	$19,483	$15,586
Monadnock Regional	$21,249	$16,999
Monroe	$34,131	$27,305
Mont Vernon	$17,647	$14,117
Moultonborough	$35,664	$28,531
Nashua	$18,270	$14,616
Nelson	$25,032	$20,026
New Boston	$17,938	$14,350
New Castle	$44,375	$35,500
Newfields	$23,890	$19,112
Newington	$39,328	$31,463
Newmarket	$23,269	$18,615
Newport	$27,628	$22,103
North Hampton	$33,209	$26,568
Northumberland	$22,601	$18,081
Northwood	$22,474	$17,980
Nottingham	$17,992	$14,394
Oyster River Cooperative	$22,134	$17,707
Pelham	$18,458	$14,767
Pembroke	$19,355	$15,484
Pemi-Baker Cooperative	$21,997	$17,597
Piermont	$27,296	$21,837
Pittsburg	$44,484	$35,587
Pittsfield	$21,649	$17,319
Plainfield	$28,055	$22,444
Plymouth	$24,275	$19,420
Portsmouth	$25,488	$20,390
Profile	$28,382	$22,706
Raymond	$21,295	$17,036
Rochester	$19,582	$15,666
Rollinsford	$23,622	$18,897
Rumney	$34,857	$27,886
Rye	$30,308	$24,247
Salem	$19,224	$15,379
Sanborn Regional	$23,756	$19,005
Seabrook	$27,906	$22,325
Shaker Regional	$22,025	$17,620
Somersworth	$21,031	$16,825
Souhegan Cooperative	$24,900	$19,920
South Hampton	$29,903	$23,923
Stark	$21,342	$17,074
Stewartstown	$35,195	$28,156
Stoddard	$27,257	$21,806
Strafford	$19,642	$15,713
Stratford	$35,397	$28,318
Stratham	$26,500	$21,200
Sunapee	$30,750	$24,600
Tamworth	$34,172	$27,338
Thornton	$31,349	$25,079
Timberlane Regional	$20,258	$16,206
Unity	$27,287	$21,829
Wakefield	$19,880	$15,904
Warren	$29,709	$23,767
Washington	$33,230	$26,584
Waterville Valley	$36,616	$29,293
Weare	$18,657	$14,925
Wentworth	$22,269	$17,816
Westmoreland	$21,827	$17,461
White Mountains Regional	$23,385	$18,708
Wilton-Lyndeboro Cooperative	$21,599	$17,279
Winchester	$23,651	$18,921
Windham	$17,560	$14,048
Winnacunnet Cooperative	$26,312	$21,050
Winnisquam Regional	$20,975	$16,780

The clear takeaway is that, even without capital funding, substantial sums would follow transfer students to their new school districts under the proposed law. On average, receiving school districts would get $17,200 per transfer student, with statewide amounts ranging from a low of $12,108 per student transferring from Auburn to a high of $35,587 per student transferring from Pittsburg.

For context, Wisconsin’s decades-old, highly successful open enrollment program will provide an estimated $10,102 per transfer student in the 2025-2026 school year and $14,454 per transfer student with disabilities.

At a time when New Hampshire’s public schools are losing enrollment, which is down nearly 5% statewide since the start of the COVID-19 pandemic, it stands to reason that many school districts will have the capacity to serve incoming transfer students and could benefit from the additional per-student funding.

Chart 1: New Hampshire Public School Enrollment (2002-2023)

Conclusion

New Hampshire policymakers can be confident that HB 741’s bill design would more than compensate public school districts for enrolling transfer students. Because of the proposed policy’s capacity provision, school districts wouldn’t be required to take on substantial new costs to serve transfer students and would likely benefit financially from this policy, especially at a time when enrollment is falling in many school districts.

The post An analysis of school funding under New Hampshire’s open enrollment proposal  appeared first on Reason Foundation.

Source: https://reason.org/commentary/an-analysis-of-school-funding-under-new-hampshires-open-enrollment-proposal/