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PODCAST | “Freedom to Learn:” Governors Should Opt in to the Federal Scholarship Tax Credit

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Kate Baker Demers on School Choice Leadership, New Hampshire’s Education Freedom Accounts, & National Momentum

Kate Baker Demers, Executive Director of Children’s Scholarship Fund New Hampshire, joined the Freedom to Learn podcast to share how a determined mom helped transform New Hampshire into a national leader in education freedom. Kate traced the origins of the state’s school choice ecosystem, from launching New Hampshire’s first education tax credit scholarship program to advancing the creation of Education Freedom Accounts (education savings accounts) that now serve thousands of families. We also explored what’s next for the school choice movement, including the promise of the new federal scholarship tax credit and why it could be a game-changer for education access nationwide.

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This conversation has been edited for length and clarity.

You run Children’s Scholarship Fund New Hampshire. Walk us through a little bit of the organization’s history.

Kate Baker-Demers: I first started on this journey, of course, with my own children and my personal experience having challenges, finding the right education environments for them. That drew me to working with parent groups on charter schools in New Hampshire.

I don’t know how much your listeners or viewers know about charter schools, but they’re tuition-free public schools that operate by lottery. I sat as the board chair of a charter school in New Hampshire for three years, watching those lotteries happen. We would have 30 seats available in the school, and a hundred children would apply, and 30 children would get the seats, and then 70 children would cry.

After watching this for three years, my friend was in the New Hampshire legislature, and he showed me the education tax credit scholarship idea. And I said to him, “This would be amazing if you’ve got this passed, but what happens after you get a law like this passed? There’s no infrastructure. There’s nothing that would make it actually help families.” And he said, “Well, Kate, you should quit your job and start the scholarship fund if I get it passed.” This is 2012.

So it passes in the House, it passes in the Senate, and the governor at the time vetoed it. And then the legislature overrode the governor’s veto and put the education tax credit into place. Like a crazy person, I quit my job and started the scholarship fund in New Hampshire.

When I did this, I didn’t understand that it was controversial until I was doing the job. And then, the teachers union sued the state. I wanted to help kids with scholarships. I thought it was a great idea and figured I’d be able to help a lot of children, but it turned into battle after battle after battle. I didn’t really get very far. By about 2015, I was raising about $200,000 a year and helping about a hundred kids.

That’s the point where I went to Children’s Scholarship Fund to ask them for best practices and support because it was small and I was really struggling. In these programs, the legislature generally puts a little bit of money allowable for administrative costs. And in New Hampshire, it’s up to 10%. But when you’re raising $200,000, 10% is $20,000. So it was really difficult.

We became part of Children’s Scholarship Fund in 2016 and were then able to have the infrastructure to be able to grow the programs to what they are today. We got to about $1.2 million and were helping about 700 kids in New Hampshire, and then the pandemic hit. And so everything closed down, which was devastating to families, devastating to children, devastating to special needs children. It was really an emergency and a disaster. And I just kept working because clearly I do this work just to help families and kids. So I kept answering the telephone the entire summer and ended up that year with the 600 kids we had helped and then 800 children on the waitlist.

It was that group of families and the New Hampshire legislature that drove the education freedom account into being. The legislature realized they should allow that small piece of state education funding to follow the child.

The private schools were open at that time. The public schools were closed. You’ll remember that during that time, the people in the grocery store were still ringing up our groceries, but they had nowhere for their children to be during the day. Nurses, police officers, delivery drivers, the LNAs in the nursing homes – those people drove this education freedom account into being because they needed that money to be able to pay for the education resources that existed for them during the pandemic. And that’s when our education freedom account passed.

Now, here in New Hampshire, we have 10,600 children with education freedom accounts and a little under a thousand children with the scholarships.

It’s funny because we’re very conservative here in New England; we don’t like to change. But in education, we’re quite innovative. For example, when our education tax credit law passed in 2012, we were the first state in the nation to include homeschoolers in our school choice program. So our education tax credit scholarship looks a lot like an ESA already. It’s multi-use, so we were the precursor to all of those ESA programs in the nation.

Let’s revisit those terms: education savings account or education freedom accounts.

Kate Baker-Demers: The first program we discussed was our education tax credit scholarship. That’s contributions that people make to the scholarship organization, and then they can get a tax credit against our state business taxes. In New Hampshire, we don’t have income tax or sales tax. So the only tax credit the state can offer is against business taxes in New Hampshire. That’s one program that we run, again, with that privately funded or raised money from contributions.

Then, in addition to that, we run our state’s education savings account and that money is the child’s per-pupil funding that would otherwise go to their district school if they went there, or, in New Hampshire, to a charter school if they went there, and now it can go also into their education freedom account, but the policy name for it is an education savings account.

It’s a small amount of money in New Hampshire. The way our education funding works is that all of the families in our education savings account program still pay all of their full local property taxes to support their district schools. They’re sacrificing, kind of paying twice in that regard. They’re paying still for their local district schools, and forgoing that, they’re only using the state portion of the money, which in New Hampshire is only about $4,000, which can follow the child if they went to a different town.

That money goes into a digital wallet, and it’s a multi-use grant. So you can use it to pay tuition, you could use it to pay for college courses. Say you’re a 12th grader and you want to do a dual enrollment program, or you could use it for online education. For example, I remember one child who lives on a farm in a rural area of New Hampshire, but he’s attending the Stanford Online High School out of Stanford University in California. You can buy textbooks and curriculum, or your computer if you need that.

So you have the education freedom accounts, as well as the accounts funded by the tax credit. And it’s clear that there was a high demand. You said over 10,000 students are benefiting from the EFA?

Kate Baker-Demers: Yes, our legislature has changed the law since they implemented it in 2021. They first put it into place with income limits. It was for families 300% of the poverty line. And then the subsequent year, they went to 350% of the poverty line. And then this past year, they removed the income limits entirely. So they made it universal, again, for every child in the state.

That makes sense, because it’s the child’s state education funding that would otherwise follow them to a public school or a charter school. When you walk up to the door of the public school or a charter school, they don’t say, “Are you low-income? Okay, you’re low-income, you can come here.” They don’t. It’s for everyone. So it made sense that the legislature removed the income limits to allow the child to access their rightful education funding. They capped the total program at 10,000 students, with the exception that we can always enroll a low-income family or a child with special needs. And that makes good sense. I mean, again, the whole reason for being of Children’s Scholarship Fund is to be able to help low and moderate-income children to access the education that they need to thrive and the education that’s the right fit for them. I mean, these are our future leaders in our world. And then they put an escalator. The number of students will increase every year by 25% if we reach the cap. We reached the cap this past year of 10,000. So we’ll continue to grow and enroll our most vulnerable students.

Are there varying levels of funding that different students generate? In Florida, a student with disabilities generates more funding, and that varies by the level of need. Is that the case in New Hampshire as well?

Kate Baker-Demers: New Hampshire also works like that. There’s a base amount of state funding. And then if you have a qualifying disability, you get a little bit more. And if you’re a low-income child, you get a little bit more. Just like that, the program helps the families that are the most vulnerable in a meaningful way.

We can also give low-income families a scholarship from the private donations that we receive. And so it helps because, as I described, the dollars are not very large. The state funding is not a very big piece of the pie.

So they’re stacking the tax credit scholarship with the education freedom account, and that’s giving them more buying power for the education option.

Kate Baker-Demers: Yes. Imagine if you’re a family earning $40,000 a year, your tuition at a private school is $8,000, and your education freedom account is only $4,000. You still need to make up that gap. That’s where the contributions that people make to Children’s Scholarship Fund New Hampshire are extremely meaningful because they’ll bridge that gap between the state funding and what someone may need to be able to afford to realize those dreams.

I’m wondering if the federal scholarship tax credit can play a role in helping those families as well.

Kate Baker-Demers: We’re hopeful that is the case. Our education freedom account is small dollars, and the scholarships average about $3,000. So when you’re a low-income family, you really need every piece of this to be able to make it work. In New Hampshire, there’s definitely a need and still a remaining gap that the opportunity for that fundraising through the new federal tax credit could be really meaningful to these families.

Kate, what you’re saying sounds very different than what the union narrative is around the federal scholarship tax credit. Their narrative is that the federal scholarship tax credit is a federal “voucher” for wealthy families. I don’t hear you saying that’s what this is.

Kate Baker-Demers: I do fundraising here at Children’s Scholarship Fund and have experience running our state tax credit program, which looks very similar to the federal program, where someone makes a contribution and then they can minus it on their taxes.

The people making the contribution want to dedicate money to education. And that’s an extremely honorable and valuable trait that these business leaders – remember, our tax credit is against their business taxes – are taking and dedicating these funds so that children in their community can have the education that’s the right fit for them. They’re thinking about their future employees and wanting their future employees to be academically prepared for leadership positions.

I think that makes perfect sense to be able to contribute your own money, to be able to contribute whatever tax you might pay, and dedicate that money to education. That’s transformational to our future.

I mean, shouldn’t you be able to have the education that’s the right fit for you at this point? I’ve seen families choose to send their child to a community college for the calculus class and an AP class at their local high school, and do math online with a specialized environment. That’s the future of education. The way that this federal tax credit scholarship is designed, it’s multi-use. You can use it for tuition. You could use it to get the technology that you need. You could use it for an online class. I think that’s the future of education. And I know that all of us want to have well-prepared students who can lead us and take care of us in the future.

The federal scholarship tax credit passed as part of the One Big Beautiful Bill Act in the summer of 2025. It is law, it’s a reality, it’s happening, and we’re at the implementation stage. And a big part of that implementation is going to be communicating just as you have been to potential donors and to families and to state leaders who need to opt in.

Kate Baker-Demers: It’s so exciting. I know that people want to contribute to children getting a great education. This is going to be a wonderful way to get that on their radar. They know they care about it, but they didn’t have a mechanism before. And organizations like Children’s Scholarship Fund, we’re lean and mean. 92% of the money is going right to kids. Our administrative costs are so low. I mean, all of us are here because we’re dedicated to children and mission-driven. And there are so many beautiful organizations operating all over the nation, like Children’s Scholarship Fund.

For your listeners, start to look in your community and see if there a little Kate Baker Demers there running around trying to raise money for kids because those people will likely be in states that opt in and then be able to create these programs that are, with the federal tax credit, much more robust than they would be able to do just fundraising in general. So it is really exciting.

First though, states have to opt in, and we need governors to follow the opt-in process that’s being laid out by the Treasury Department. Are you seeing good things on that front?

Kate Baker-Demers: It does seem like people are really excited about it. I’m hearing that the governor of Massachusetts is questioning whether or not to opt in. Of course, it’s very likely the governor of New Hampshire will opt in. What I don’t understand is why a governor would choose not to opt in, because they’re limiting who we can help.

For example, if someone were in Massachusetts and wanted to contribute to kids in Massachusetts, they could give us a contribution and say, give it to kids in Massachusetts. But the governor’s making it so we wouldn’t be able to. I’m wondering how they’ll reconcile with that in the long run, that there are going to be people in their state who want to help children in their state. But if the governors don’t opt in, people can’t donate to children in their states.

I hope that they understand that and see the light in that regard and make it so that at least their own citizens of their state can invest in children in their own neighborhoods, because that’s what everyone wants — to help kids in their neighborhood to have a great education. I’m hoping that every governor in the entire nation opts in.

The idea of a governor not opting in and denying all students, including struggling public school students, this opportunity to receive funding to help them with their educational journey seems short-sighted.

Kate Baker-Demers: We hear from quite a few families who have children that they want to stay in their local district school, but they do need help with a technology scholarship or a tutoring scholarship. I agree with you that it is extremely meaningful to those families to be able to get assistance so that they can get the academics that they need and stay where they are. That’s also a form of school choice if you think about it, right? Staying in the school that you’re in.

I am hopeful that every governor in the nation will understand that it’s private contributions.

The Treasury Department has opened up the process by putting out the opt-in form, and they have taken in comments largely from a scholarship-granting organization (SGO) perspective, and are going through those comments. All of that will turn into a proposed rule or regulations around this program. What are you hoping to see from the Treasury Department in 2026?

Kate Baker Demers: I like expeditious rules that are clear and simple. That’s all we need, as scholarship granting organizations, is [speed] so that we can prepare, and clarity so that we can implement the existing law and the regulations exactly how they want us to do it.

New Hampshire’s not alone in having a state tax credit program. There are about two dozen states that have them. SGOs know how to do this.

Kate Baker Demers: We’re accustomed to operating under legislation and then with rules and then with state departments that we work with. For example, in New Hampshire, we work with our Department of Revenue on the tax credit program, and our accountability rests there with reporting. On our education savings account, we work with our Department of Education, and our reporting and accountability rests there.

So, you’re right. The scholarship organizations that exist in states do have experience working with many different types of departments. Every state, of course, is a little bit different, but I think that the federal tax credit law is very simple. And that’s a benefit because it doesn’t need to be overruled or overregulated.

As we conclude, I like to have guests dispel education myths. Is there a pernicious or pervasive myth that you’d like to tackle today?

Kate Baker Demers: I’m going to tell you the thing that bothers me. Sometimes in legislative hearings, I’ll hear people say that they feel like low-income families don’t have enough information or resources or the ability to make these choices for their children.

Families that struggle economically have the most skin in the game. These are families who want a different life for their child. They know what it is to struggle and don’t want their children to struggle in the future. They are the families who spend the most time trying to find the best education option for them and the most time in dedicating resources and energy towards helping their children to have a successful life. Low-income families with economic challenges should absolutely be empowered to make these decisions for their children. They know their children best, and their economic circumstances should never be a barrier to that.

Absolutely. How can people follow your work? How can they keep up with what CSF is doing?

Kate Baker Demers: Our website is nh.scholarshipfund.org, and our links to our Facebook, Instagram, and LinkedIn are there. We’d love to have anyone involved in New Hampshire. It’s an amazing state, and the families in our program are continually grateful to our governor, to our legislature, to the people that donate, to the scholarship fund enabling them to have education freedom.

Access our full conversation on your favorite podcast app. Please follow Freedom to Learn on Apple Podcasts to receive new episodes every Thursday morning!

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