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Inescapable realities about New Hampshire: Live Free or Die is the best state motto; we have better maple syrup than Vermont; and we may never stop fighting about the right way to pay for public education.

Everything about school funding is up for grabs this year, with new proposals coming out of the State House, a lawsuit heading to the state Supreme Court, and an open gubernatorial race putting free-market reforms in the spotlight.

“This is a great opportunity for us to have these conversations,” said Sarah Scott with Americans for Prosperity.

Scott and AFP hosted a forum last week at Throwback Brewery in North Hampton with state Reps. Glenn Cordelli (R-Tuftonboro) and Dan Maguire (R-Epsom) to educate people about the realities of the biggest tax bill in the state.

The problem is front and center for legislators this session, who are working on different proposals to address education spending without raising taxes. But whether they do that is up in the air.

Cordelli, vice chair of the House Education Committee, said there’s no guarantee conservative lawmakers can get meaningful changes since House membership is split so evenly. Republicans control the House with a slight majority, which can evaporate depending on the time of day. If the weather is bad, or several members are sick, or votes happen after lunch, the majority can flip.

“Every day, it’s a gamble which party is in charge depending on who gets to the State House,” Coredelli said.

But the local level is where taxpayers bear the largest education funding burden, Scott said. “Most towns spend between two-thirds and three-quarters of their taxes on education.”

And they could end up paying more, thanks to the recent court decision in the ConVal funding lawsuit. Judge David Ruoff ordered the state’s adequacy grant of $4,100 per pupil raised to at least $7,300. The ConVal ruling is causing more problems than it will solve, Maguire said.

“ConVal is the logical conclusion of 30 years of bad rulings,” Maguire said, who sits on the House Finance Committee. “At some point, we have to get off this track of unreality.”

The Supreme Court’s Claremont decision from the 1990s paved the way for adequacy grants and the statewide property tax. Currently, the state sends about one billion dollars a year to local schools in the form of adequacy grants and other aid programs. 

Under the current system, what each town gets per pupil varies. The base grant of $4,100 goes up for students determined to have greater need, and for students in communities that are considered property poor. However, Maguire said if Ruoff’s ruling stands, all of the extra funding for students and communities in need would go away. 

Ruoff’s ConVal ruling would seem to add at least $500 million to education spending on top of what is already being paid. But Maguire said it would result in all of the funding being replaced by a flat $7,300 per pupil grant, leaving poor communities scrambling again. 

Lawmakers are searching for a fix while the state appeals Ruoff’s ruling to the state Supreme Court. But state spending on education represents less than a third of total spending. The rest comes from homeowners through local property taxes, and those taxpayers are already shelling out more for less.

Department of Education data released this month show the new statewide average operating cost per student has reached a record-setting $20,323 for the 2022-2023 school year. That’s a 4.8 percent increase over last year’s $19,400 and close to a 90 percent increase on 2000’s $11,000 per pupil cost.

This year’s new average — well above the national $14,295 — puts the Granite State on track to spend $3.8 billion in total on education for the 2022-2023 school year.

Over the same period, student enrollment numbers in the Granite State cratered. The student population dropped from 207,684 in 2002 to 165,095 in 2023. That’s a decrease of 42,589 public school students, or about a 20.5 percent decline during the past 21 years. 

Coredelli sees an opportunity to deliver education in charter schools and the Education Freedom Account system with better results and lower costs.

“At the end of the day, the free market is the only way to make changes to education,” Cordelli said.

About 7,000 students are enrolled in New Hampshire’s charter schools. Those tuition-free public schools receive state funding of up to $9,000 per pupil and no local tax revenue. Instead, the schools are operated as non-profits and raise donations to cover expenses beyond the state grants.

The EFA program awards grants of around $5,000 per pupil to qualifying families, who are then able to put that money toward any education choice: public, private, or home school. EFA enrollment went up 20 percent this year to 4,211 while costing taxpayers about $22 million in total. 

Just days after a New Hampshire Department of Education report showing public school enrollment plunging amid spending hikes, a judge has ordered the state to pay even more.

Rockingham Superior Court Judge David Ruoff released his long-awaiting ruling in the ConVal education funding lawsuit on Monday, declaring the state must pay a per-pupil minimum state adequacy grant of $7,356. The net cost to state taxpayers would be nearly $538 million per year. And, Ruoff said, that’s likely just the beginning.

“What is the base cost to provide the opportunity for an adequate education 239 years after that fundamental right was ratified in our Constitution? The short answer is that the Legislature should have the final word, but the base adequacy cost can be no less than $7356.01 per pupil per year, and the true cost is likely much higher than that. At a minimum, this is an increase of $537,550,970.95 in base adequacy aid to New Hampshire Schools,” Ruoff wrote.

Ruoff wasn’t done. In a separate ruling in the Rand vs. State of New Hampshire case, Ruoff ruled that property-rich communities can no longer keep excess Statewide Education Property Taxes revenue in reserve. That practice allowed these communities to set a negative SWEPT tax rate.

Ruoff initially tried to avoid setting a number in the ConVal case. He ruled for ConVal in 2019, finding that the state’s education funding system results in an inadequate amount per pupil, and is therefore unconstitutional. However, he originally ruled that it is up to the legislature to determine the number, not a judge.

After the state appealed, the New Hampshire Supreme Court ordered Ruoff to hold a trial and determine what the cost per pupil ought to be. 

Ruoff’s order still faces a possible challenge from the state. Gov. Chris Sununu called Ruoff’s decision an overreach.

“New Hampshire currently spends among the most per capita on public education than nearly any other state. Today’s decision is deeply concerning and an overreach into a decades-long precedent appropriately placed in the hands of our elected representatives in Concord,” Sununu said.

New Hampshire Department of Education Commissioner Frank Edelblut’s office declined to comment. Michael Garrity, communications director for New Hampshire Attorney General John Formella, said Ruoff’s decisions are being reviewed.

“We have received the court’s order. We will review it and consider potential next steps,” Garrity said.

But the Josiah Bartlett Center for Public Policy, a pro-education-reform think tank, immediately blasted the premise of the judge’s ruling, noting that education spending in New Hampshire has exploded, even as the number of students in the k-12 fallen drastically.

“NH public schools are not ‘underfunded’ and have not experienced a decline in funding this century. On the contrary, as school district enrollment fell by 30,000, spending, adjusted for inflation, rose by nearly $1 billion,” the Barlett Center posted on X.

As for the judge’s arbitrary price of an “adequate” education, the center responded:

“Trying to figure out the true cost of an adequate education by measuring what monopoly school districts spend is like trying to figure out the true cost of package delivery by measuring Post Office prices before the arrival of FedEx and UPS. Markets, not judges, set prices.”

But Democrats, who’ve been pushing for more state spending for decades, were delighted.

State Sen. Democratic Caucus Leader Donna Soucy (D-Manchester) is ready to start charging. Ruoff’s decision will be the template she and other Democratic lawmakers will use going forward as they look to increase school spending to at least the $7,300 minimum,

“Our caucus will closely review the court decisions released today, and we will examine legislative action to ensure that a constitutional formula is enacted,” she said.

Zack Sheehan, the executive director of the left-leaning New Hampshire School Funding Fairness Project, called the decisions big wins for students and property taxpayers. He said that the legislature’s refusal to fund education at the state level has pushed the bill down to local property taxes and burned homeowners.

“These are exciting rulings, but for their impact to be felt, the legislature has to get to work and bring our school funding statutes into line with this and all past school funding rulings,” Sheehan said. “The changes promised in the Claremont decisions have been denied to Granite Staters for too long already, so I want to see the state accept this ruling and not continue wasting time by appealing it to the New Hampshire Supreme Court.”

In actuality, New Hampshire hit a state-spending record on k-12 education in the current budget, while few communities cut their property taxes.

In deciding that $7,300 is the minimum adequate education amount, Ruoff used numbers provided by public school districts and the Department of Education. There was no data from public charter schools or private schools, Cline said. He added that it is like deciding what the price of a hamburger ought to be based on just the McDonald’s Big Mac while ignoring Burger King and Wendy’s.

“Markets, not judges, determine prices. That’s the fundamental flaw in this whole game. New Hampshire needs a market for educational services,” Cline said.

The ConVal and Rand lawsuits are the ideological, if not legal, sequels to the Claremont lawsuits of the 1980s and 1990s. In Claremont, the New Hampshire Supreme Court ruled all New Hampshire children have a constitutional right to an adequate education, and the state is on the hook to make sure that happens. The Supreme Court, however, left the funding details up to lawmakers.

The Peterborough-based Contoocook Valley Regional School District filed the lawsuit in 2018, arguing the state’s then-adequate education grant of $3,600 per pupil was far below the true cost and, therefore, was unconstitutional. ConVal and the dozens of school districts that joined the lawsuit wanted closer to $10,000 per pupil.

Since the ConVal suit was filed, lawmakers and Sununu bumped up the grants to $4,100 per pupil, an amount Ruoff still found unconstitutionally low. The total cost of education in New Hampshire, including the portion paid through local property taxes, averages just shy of $20,000 per pupil. 

The Rand lawsuit saw parents in property-poor towns challenging the way they claimed wealthier communities were able to game the SWEPT system, increasing the propeller of education funding inequality.

SWEPT accounts for 30 percent of education funding in New Hampshire. Under the law, as many as 30 wealthy Granite State communities keep a portion of the money raised through the SWEPT, while some poorer towns are paying more, according to the lawsuit.

With the tax filing deadline fast approaching, a new analysis finds New Hampshire residents have the lowest tax burden in New England and one of the lowest nationally.

Meanwhile, just across the line in Massachusetts, soaring taxes on top earners are sending them fleeing to low-tax states like Florida and, yes, New Hampshire.

The new WalletHub analysis uses a metric of income taxes, sales taxes, and property taxes to calculate overall tax burdens. New Hampshire has the third lowest overall tax burden, trailing just Alaska and Delaware. New Hampshire’s performance is even more impressive when compared to other states in the region. Three of the five states with the highest tax burden are in New England (Maine, Vermont, and Rhode Island).

New Hampshire is the only New England state not in the top 20 for tax burden.

State Senate Finance Committee Chairman James Gray (R-Rochester) said New Hampshire’s low taxes and efficient government are some of the reasons for the state’s economic success. “There’s an awful lot of people who choose New Hampshire because we are fiscally responsible with our money,” Gray said.

A different Wallethub analysis last week ranked New Hampshire number one for taxpayer return on investment.

The one glaring exception was property taxes. Granite State homeowners have the third highest property tax burden in the country, according to WalletHub, behind Maine and Vermont.

Gray said New Hampshire’s reliance on property tax to pay for services like education gives voters the most control over their money possible. He said that local control likely results in lower spending and taxes than if the decisions were all made in Concord.

“You have to have something to run a government by, and a lot of the things that we fund, especially schools, we pay for through a property tax,” Gray said. 

The effects of New Hampshire’s low taxes and efficient spending don’t end at the border. A new report from the Massachusetts Society of CPAs on the impact of the Bay State’s new “millionaire’s tax” — which raises the top state income tax rate to nine percent — says 82 percent of CPAs report they have high-income clients seriously considering relocating in the next 12 months. 

And tax-free New Hampshire is near the top of their list of potential destinations.

“Florida and New Hampshire are overwhelmingly the most popular choices for relocation,” the CPA report states. “While some may argue that a move to Florida is driven by a desire for better weather and a different lifestyle, the fact that the second most popular destination is New Hampshire suggests that people want to stay in the area but may be motivated instead by a lower cost of living, including a lower tax burden.

“Furthermore, New Hampshire is set to repeal its Interest and Dividends Tax by 2026, which would decide to relocate even more appealing.”

Granite State Democrats tried but failed to push through legislation reversing the repeal of the interest and dividends tax for people earning $50,000 or more per year.

New Hampshire already has the strongest economy in New England, with low unemployment and low poverty rates. The Live Free or Die state’s commitment to low taxes will help it stay in the pole position, according to Joseph Krupka, an accounting professor at Florida State University.

“Here is a simple answer, the lower state tax burden will drive the state economy. Corporations seek state tax incentives when developing long-term strategies for where to locate new facilities such as plants and offices,” Krupka said. “Reduced corporation and real estate tax burdens along with a favorable personal income tax for their employees are the two keys.”

Gray knows there are a lot of factors considered by business owners who want to relocate, from infrastructure and energy costs to the local labor supply. Some states even offer financial incentives that New Hampshire does not currently match. But, he said, New Hampshire will keep to its low-tax structure.

“That’s just the way we do it,” Gray said. 

Now that she doesn’t have to run for reelection in Manchester, Mayor Joyce Craig is leaving the city with a school system that is losing students and a budget that relies on $30 million in one-time funding. 

Craig’s proposed 2024 budget uses $30 million in COVID relief funds to pay for ongoing school district expenses like salaries and staff benefits, as well as transportation costs. Craig’s use of temporary revenue will become a problem for whoever takes her job next. Craig recently announced she is not running for a fourth term.

Jay Ruais, a Republican running for mayor, said Craig’s budget for 2024 is irresponsible.

“Using one-time funds for recurring costs is a band-aid approach, not a long-term solution to our city’s needs, and is a practice that will continue to harm us down the road,” Ruais said.

“Communities like Manchester will continue to face significant education funding gaps as long as the state continues to underfund public education and downshift costs to local taxpayers. I encourage the legislature to pass pending legislation that reinstates state contributions for teacher retirement and increases State Adequate Education Aid,” Craig said during this month’s annual budget address.

Craig blames a drop in state education funding for creating the need to use federal funding for operating expenses this year. In fact, state aid has increased on a per-pupil basis. It’s falling enrollments that are costing the district funds, leaving taxpayer groups to ask why the city needs more money to educate fewer students.

According to data from the New Hampshire Department of Education, since 2000, enrollment in Manchester schools has fallen by nearly 28 percent. At the same time, per pupil costs have risen more than 55 percent.

Craig’s office did not respond to a request for comment.

Victoria Sullivan, a Republican considering another run for mayor, said Craig is going to leave the city by giving residents a tax increase after she’s long gone.

“The increased tax burden facing the taxpayers next year when the city has to reconcile the budget without the tens of millions of Cares Act, ESSER, and ARPA funds that have been irresponsibility used will either force significant layoffs across our city or force rents and property taxes to skyrocket,” Sullivan said. “Our citizens cannot afford this short-sighted budget or the inevitable consequences of it.”

Manchester’s projected State Adequate Education Aid grant comes to a little more than $44.8 million for 2024. That’s based on an anticipated average daily attendance in the district of 11,601 students.

Since the State Adequate Education Aid is based on those attendance numbers, the city’s adequate funding depends on its ability to keep families and students. Last year, with more than 12,000 students, Manchester schools got more than $45.5 million from the state, meaning the projected 2024 grants are hardly a large drop in funding. 

In 2014, Manchester was getting more than $46 million from the state in adequacy grants thanks to the fact it had more students. At the time, Manchester’s average daily attendance was more than 13,000 students.

Manchester isn’t alone in losing students. According to data released by the New Hampshire Department of Education earlier this year, The Granite State has seen a 22 percent drop in the number of students since 2002. That year, there were 207,648 students enrolled in schools in 2022. The number has fallen to 161,755 enrolled for the current school year. Meanwhile,  the cost per pupil has gone up an average of 78.4 percent since 2000. 

Craig’s $390 million total 2024 proposed budget for the city and school district is headed to the Board of Alderman for approval. Of that, the school district budget is about $190 million. Craig boasted in a recent budget address she’ll be able to lower local real estate property taxes under her plan using money left over from the Elementary and Secondary School Emergency Relief Fund, part of the CARES Act.

The ESSER funding was sent to districts in order to make sure students were still getting an education during the COVID emergency. The U.S. Department of Education recommended using the money to support remote learning for all students, especially disadvantaged or at-risk students, and their teachers.

Ruais said Manchester is ready for leadership that knows how to balance a budget without tricks.

“Our city cannot achieve its full potential unless we have a fiscally sound budget. Year after year we see taxpayers footing the bill for irresponsible spending practices, as taxes continue to go up,” he said.

The way New Hampshire funds education could be completely upended as two separate lawsuits advance in court. One suit seeks to halt education property tax rates and the other attempts to increase the amount the state pays per pupil. 

Plaintiffs in the Grafton County education lawsuit are set to argue Friday that the state should not be able to set a rate for the Statewide Education Property Tax (SWEPT), arguing the tax is unconstitutional as implemented.

Meanwhile, Gov. Chris Sununu won’t be forced to sit for a deposition in the Contoocook Valley Regional School District lawsuit. Rockingham Superior Court Judge David Ruoff ruled the plaintiff school districts failed to show the governor is in possession of any unique knowledge.

Both lawsuits are attempting to force the state to pay more of the costs for local schools, with plaintiffs in both cases alleging the state has never followed the New Hampshire Supreme Court’s rulings in the 1980s and 1990s Claremont cases.

The Grafton County case involves several state residents who are also commercial and residential property owners. They claim New Hampshire is violating the 1997 Supreme Court’s Claremont II decision.

In Claremont, the court ruled New Hampshire has a constitutional obligation to provide an adequate education. That decision found, in part, that the use of local property taxes with varying rates to pay for the state’s obligation to provide its students with an adequate education is unconstitutional.

The ConVal case, which now includes dozens of school districts as plaintiffs, seeks to force the state to increase the per-pupil grants for an adequate education from $3,600 per pupil to around $10,000 per pupil, alleging the current grant does not cover the necessary services.

According to attorneys in the Grafton County case, Andru Volinsky, John Tobin, and Natalie Laflamme, the state continues to ignore the Supreme Court by using varying rates for the SWEPT, which in effect continues to punish poor communities with lower property values.

“Ever since (Claremont II,) the state has tried numerous mechanisms to avoid implementing an equitable tax system that would have the effect of imposing a fairer tax burden on wealthier towns, requiring the courts to intervene and protect the constitutional rights of New Hampshire citizens. Now, the state is primed to once again impose a tax using the same mechanisms previously held unconstitutional that will result in some taxpayers paying up to seven times as much for education funding as their wealthier counterparts,” the attorneys write in a new filing with Grafton County Superior Court.

The Grafton County plaintiffs are now seeking an injunction to prevent the state from setting a tax rate, asking the court to keep the SWEPT rate at $0. A hearing on the injunction is set for Friday.

The SWEPT accounts for 30 percent of education funding in New Hampshire. The tax started in 1999 as a response to the Claremont decisions, which found the state has a constitutional obligation to fund an adequate education. The money raised, more than $360 million estimated in the coming year, is used to fund state adequacy grants.

According to the plaintiffs, wealthy communities raise more funds per pupil through SWEPT than the state’s low standard for what it asserts is the cost of a state-funded adequate education. And since 2011, the state has allowed those wealthy towns to keep the surplus, which flies in the face of the Claremont decisions, according to the motion.

“The SWEPT tax as currently administered is not uniform in rate as the state allows towns with surplus SWEPT funds to either set a negative local education tax rate to offset the state’s official equalized SWEPT tax rate or retain the excess,” the motion states. “Both of these mechanisms have been previously deemed unconstitutional by New Hampshire courts.”

In the ConVal case, the plaintiffs sought to depose Sununu in order to get him to testify about the reasons he vetoed a bill that would have increased education spending by $140 million. The bill would have paid for the increase by rolling back some of Sununu’s business tax cuts.

Ruoff found the plaintiffs did not articulate how Sununu’s veto was directly related to the issues involved in the lawsuit, like funding for transportation, meals, and other necessary services.

Ruoff has already found the state is not following the Claremont decisions and that it is unconstitutionally underfunding education. The ConVal case is slated for trial in the spring to try and determine what the adequate education grant should be per pupil. 

U.S. Rep. Chris Pappas hopes New Hampshire gets a new commuter rail service connecting Nashua and Manchester to Boston. Critics note how few Granite Staters use available rail now and don’t think local property taxpayers want to pick up the estimated $11 million tab to subsidize the trains.

Commuter rail is part of the $1.2 trillion infrastructure spending package pushed by President Joe Biden and supported by all the members of New Hampshire’s congressional delegation. Biden signed the bipartisan infrastructure bill, which includes $66 billion for rail, in November.

“This is a project that continues to bubble from the bottom up here in New Hampshire,” Pappas told Manchester’s InkLink last summer about the Capitol Corridor rail project. “I hear about it everywhere I go, residents who are looking for an opportunity to get to work, businesses that are looking to attract the kind of talent they need, and from local leaders who understand this can be an economic engine for New Hampshire.”

The train service would potentially go from Manchester through to Lowell, Massachusetts, with stops in Nashua and at the Manchester-Boston Regional Airport. 

Greg Moore, with the libertarian American for Prosperity organization, said New Hampshire cannot afford the fare. The service cannot operate without a taxpayer-funded handout, he said.

“Every state study has shown that it would require substantial taxpayer subsidies to benefit a small number of riders,” Moore said.

Moore said there are better ways to solve commuting problems that meet 21st century needs. He suggested private services like Turo or ZipCar, as well as Uber and Lyft.  

“Trying to jam an expensive 19th-century transportation solution onto the hard-working taxpayers of New Hampshire makes no sense,” he said.

A common argument from opponents of expanded rail is Granite Staters rarely use the service that’s currently available. The Amtrak Downeaster, for example, connects the Seacoast towns of Dover, Durham, and Exeter with Maine and Boston. According to Amtrak, New Hampshire riders make up less than 20 percent of the total ridership.

In 2019, before the COVID-19 pandemic hit, fewer than 2,000 trips a week began or ended in the Granite State. During the pandemic when ridership fell, the number of trips originating or ending in New Hampshire fell to 362 per week. Neither of those numbers is enough to sustain rail service without taxpayer subsidies.

In fact, Amtrak — often hailed as a success story — has received annual federal subsidies of $1.5 billion to $2 billion, in addition to the new billions from the bipartisan infrastructure bill. And the only reason service in the Northeast “pays for itself,” as advocates claim, is because of inventive bookkeeping that hides a huge backlog of needed maintenance and the subsidies it receives from state governments.

State Rep. George Sykes, D-Lebanon, a member of the House Transportation Committee, said every form of transportation, from air travel to bus service, is subsidized by taxpayers to some extent.

“There’s no free lunch when it comes to transportation,” Sykes said.

Sykes said rail service would be a net financial positive for the state in the long run when factors like increased development and savings on highway maintenance costs are considered. Paying for the service through taxes or fees just goes the territory, he said.

“My question to (those opposed to rail) would be, name me one aspect of transportation where they don’t have to pay for, one way or another.”

Sykes’ colleague on the Transportation Committee, Aidan Ankarberg, R-Rochester, doesn’t want his voters to have to pay for a service they are not going to be able to use. He recently filed a bill that would keep any state funding from being used for the rail project.

“It is not fiscally responsible or the New Hampshire way to expect my constituents in Rochester to pay for a commuter rail in Manchester that very few people will use,” he said. “My bill protects Rochester and other Granite State taxpayers from this boondoggle before it begins.”

Ankarberg said the most recent Department of Transportation report on the commuter rail, which estimates the state would need to subsidize the service at $11 million, is several years old and out of date. The true cost for the service to taxpayers is likely closer to $16 million, he said. That money would come from increased property taxes, or cuts to education funding, he said.

“While current estimates aren’t available, the DOT previously suggested raising statewide property taxes by $15.7 million or diverting 5 percent of our education funding in order to cover the commuter rail’s operating and management costs,” he said.

That kind of spending isn’t going to catch on in New Hampshire, according to Moore.

“Thankfully, there is little appetite in the state legislature for saddling state taxpayers with this backward approach,” Moore said. “New passenger rail isn’t happening anytime soon.”