ALTHOUGH largely unheeded in the shadow of COVID-19 and the 2020 election, two simultaneous efforts to resolve New Hampshire’s longstanding school funding and property tax inequities have moved forward during the spring and summer. Both will reach crucial turning points in the coming weeks.
More specifically, the constitutionality of the current school funding system may soon be decided by the New Hampshire Supreme Court, while, after months of research and discussion, the Commission to Study School Funding is preparing its recommendations for long-term reform of the current funding formula and the property taxes used to pay for it.
In March 2019, the Contoocook Valley School District (ConVal) and three other nearby districts filed suit challenging the constitutionality of the state’s school funding formula, which provides a base annual grant of $3,709 per student, even though the actual costs school districts incur average $16,000 per student. Because the state fails to meet its funding obligations, local taxpayers must make up the difference, at disproportionate tax rates that violate the state constitution. In June 2019, a superior court decision held that the current funding formula was irrational and unconstitutional and it directed the Legislature to fix it. The state appealed that ruling and the case was argued before the state Supreme Court late last week.
As the result of extensive and genuine grassroots pressure, the Legislature last year created an independent commission to study the school funding system and recommend long-term solutions that would create a more equitable and realistic funding formula. The commission is slated to issue its recommendations for further legislation by December 1, about the same time as we might expect a ruling from the Supreme Court in the ConVal case.
To inform its deliberations, the commission hired a national research firm, the American Institutes for Research (AIR), which recently provided a draft report. The report’s first key finding bluntly summarized the present system’s disparate impact:
“The state’s current system is inequitable from both student and taxpayer perspectives. The districts serving the highest proportion of students who are economically disadvantaged spend less, on average, compared with districts serving the fewest such students. Moreover, the districts with the least property wealth per student impose the highest local education tax rates to be able to fund their children’s education.”
The draft report also compared educational outcomes across districts. AIR found that districts with higher percentages of economically disadvantaged students, students in special education, and students who are English-language learners (ELs) also perform worse, on average, compared with districts with fewer of these students. As a result, the report concluded that districts serving such students require more spending per student to achieve a common desired level of student outcomes.
The rest of AIR’s report tackles two questions that flow from this data: how to construct a funding formula that addresses the differing needs of school districts and how to fulfill the state’s obligation to pay for this funding.
The report proposes a new focus for the funding formula, based on measurable student outcomes. Because our state’s average test scores are higher than those in many other states, the researchers determined that achieving an average test score is a valid indicator for the delivery of the opportunity for a constitutionally-adequate education to every student.
In prior cases, the Supreme Court has said that the state had a duty to pay for the cost of “adequacy” in every district, while explicitly recognizing that this might mean different levels of funding from district to district, depending on each district’s needs. The draft report’s proposed formula would meet the state’s core obligation to fund a constitutionally-adequate education to all students wherever they live, while targeting extra aid where it is needed.
The report suggests that the state could more equitably fund education through a statewide property tax that pools revenue centrally and distributes it according to the formula. Through this funding scheme, districts with lower capacity to raise revenue would receive more funds from the state, thereby adjusting for disparities in local capacity. The commission has discussed at length the need for enhanced state-funded property tax relief for low-income homeowners, but has not yet adopted any specific approach to achieve this goal.
With a Supreme Court decision and a final commission report coming soon, the public debate about school funding and the next Legislature’s responsibilities will likely become clearer and more intense. In the meantime, as the election nears, we have the opportunity to ask legislative and gubernatorial candidates where they stand on this issue and to urge them to finally resolve this problem fairly and comprehensively.
John Tobin is board chair of the N.H. School Funding Fairness Project, which is sponsoring five candidate forums in the next month on the issue of school funding and property taxes. To learn more visit fairfunding nh.org. Tobin lives in Concord.