There has been significant news coverage and public discussion about school funding and high property taxes in New Hampshire over the past few years. Strong rulings in favor of the plaintiffs in both the ConVal and Rand lawsuits have certainly contributed, but recent state budget cycles have also featured debate about the lack of school funding and the pressure created on local property taxpayers.
Why is it that we need to fix our school funding system at all in New Hampshire? What about the way that we fund schools currently causes problems? And whose role is it to tackle this at a systematic level anyway?
The state provides each school district with a set amount of money per student, called base adequacy. This comes from the Claremont decisions of the 1990s, where the New Hampshire Supreme Court ruled the state has a constitutional responsibility to ensure every student has the opportunity for an “adequate education,” preparing them for post-high school success.
Today, base adequacy is set at $4,100 per student, while the actual average cost of educating a New Hampshire student exceeded $20,000 last school year. Including variable, additional funding, the average state grant per pupil for the 2022-23 school year was $6,089. About 70 percent of all public school money comes from us, local property taxpayers (including the statewide education property tax). Put another way, the state currently downshifts over $2 billion onto local property taxes each year.
For example, Goffstown spent $16,401 per pupil last year, one of the lowest in the state, with an education property tax rate of $10.01 per thousand. Like most other communities, their budgets are scrutinized and voted on every year by citizens at town meetings. They received $5,110 per pupil in state adequacy aid, less than a third of their actual costs.
Wolfeboro, on the other hand, spent $22,946 per student with an education property tax rate of only $4.11. What does Wolfeboro have that Goffstown doesn’t? Lakefront property that increases their overall property value and helps keep taxes lower.
It is not bad for towns with higher property values to enjoy lower taxes and ample school resources, but public policy should strive to extend these benefits to all children across our state. For communities struggling with high property taxes, lower outcomes for their students, or both, don’t be fooled into thinking this is due to a lack of effort, misplaced local priorities, or inefficient administration.
The real-world cost of education far exceeds what the state provides in adequacy aid, which downshifts the bulk onto local property taxes. As illustrated above, communities are impacted differently by this downshifting depending on property values. Lakes, ski mountains, and coastal properties help keep tax rates relatively low. If not, there’s nowhere else to turn except local property taxes. Around the state, communities with the lowest property values have some of the highest property taxes while collecting less revenue to provide for their students.
These deep disparities in taxes and educational opportunities are the backdrop for the two current school funding lawsuits.
In November, the Superior Court ruled in ConVal v. State of New Hampshire that the state’s current base adequacy amount was unconstitutionally low and should be increased to no less than $7,356.01.
This ruling was the result of a four-year lawsuit culminating in a three-week trial in May 2023, where almost 20 school superintendents and business administrators testified that their districts could not provide an adequate education solely with the state’s adequacy payments.
In the face of this overwhelming evidence, the state offered zero defense for the current adequacy amount. The court wrote that the state presented “no evidence to justify the current base adequacy amount.” A Right-to-Know request with the New Hampshire Attorney General’s Office later revealed that between the filing of ConVal in 2019 and the end of 2023, the state spent $1,084,864 of taxpayer money on out-of-state lawyers for its defense in the case.
Increasing adequacy from $4,100 to $7,356 would not represent an increase in total education spending, but a shift from local property tax payers to the state. The three main differences between the court’s adequacy floor and the current amount are student transportation, school building maintenance, and school nurse services. These are currently required by the state, but are being paid for by local property taxes. Including these services in adequacy shifts the cost from local taxpayers to the state, providing property tax relief around New Hampshire.
While the court set a floor for base adequacy, it left the ultimate decision of what adequacy should be up to the legislature. This respects the separation of powers while acknowledging that this issue has been politically gridlocked for decades.
The court also issued a partial ruling in the other school funding lawsuit, Rand, finding the way SWEPT is currently administered unconstitutional. The full trial, including the question of low state funding, will be in September.
Some legislators were quick to condemn the court for setting an adequacy amount. At the same time legislators claim they can’t act now because they want to wait for a ruling on the appeal.
The legislature cannot have it both ways. Action is clearly needed now. The people directly harmed by stalling are local property tax payers who continue to pick up the slack for the state, and students who miss out on educational opportunities they could have with additional state funding.
The legislature has an opportunity to do something now, with two bills that could start tackling some of these challenges and offer small but immediate relief.
House Bills 1583 and1656, which have received strong, bipartisan support at every step of the legislative process so far, both provide additional school funding.
HB 1583 increases school funding by about $60 million starting this July, increasing to $74 million next year. It increases base adequacy from $4,100 to $4,404 per pupil, directs $39 million to communities with low property values and high taxes, and sends $25 million to districts with high numbers of students living in poverty. At the public hearing in the Senate on April 30, everyone who testified supported the bill, including a letter signed by 11 of New Hampshire’s 13 mayors, superintendents, school board members, business leaders, and taxpayers.
HB 1656 was drafted to address special education costs. Currently the state provides about $95 million (10.47 percent) for special education costs for the over 30,000 students benefiting from those services. While HB 1656 has been amended down to a small increase of only $17.5 million, it still provides much needed relief to our communities. Both HB 1583 and 1656 are use surplus in the Education Trust Fund, and do not rely on a new source of revenue.
While these bills do not solve the school funding problem in our state, and do not meet the standard set in the ConVal ruling, they are still a step in the right direction. The Senate should follow the House’s example and support this legislation. The overwhelming support for these bills should also make it clearer to the legislature that it is more important than ever to fix our upside-down school funding system, with these bills serving as a prelude to more substantial reform in the state budget next year.
