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.
On Thursday, Sept. 24, the constitutionality of the current school funding system will be debated before the New Hampshire Supreme Court. And, after months of research and discussion, the Commission to Study School Funding created by the Legislature last year is in the midst of 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, the superior court 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 will be argued this week.
As the result of extensive and genuine grassroots pressure, the Legislature last year reversed the school funding cuts that had been in place since 2016 and provided a one-year increase in the state’s school funding effort. It also 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 and, in particular, to perform detailed statistical assessments of New Hampshire’s school funding system, the commission hired a national research firm, the American Institutes for Research (AIR). Last week, AIR 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 commission has not yet determined how fully, if at all, it will endorse the report’s answers to these questions, but the proposals are clearly worthy of thorough consideration by the commission, as well as discussion and debate by New Hampshire voters and taxpayers.
The report proposes a new focus for the funding formula, based on measurable student outcomes instead of the current reliance on inputs (the costs of the various components of a public school system). Because our state’s average test scores are higher than those in many other states, the researchers determined that achieving a New Hampshire average test score is a valid indicator for the delivery of the opportunity for a constitutionally adequate education to every student.
The researchers created a “weighted” formula that allocates funding to districts according to the costs facing each district, including the extra costs of the needy students who are present in higher proportions in many property-poor districts. This formula would more adequately fund high-need districts and aims to improve student outcomes in those districts over time. All school districts would receive state support, but the amounts would be tailored to the differing needs of the students in each district.
In prior cases, the N.H. 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’s revenue proposal focuses entirely on property taxes as the source of the predominant portion of state funding for education. No change in the other existing sources of state funding and no other form of taxation are contemplated in the report, consistent with the substance of discussions among commission members to date.
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. The report notes that this could be paired with a mandatory minimum local property tax, at uniform levels set by the state. 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 (NHSFFP), which is sponsoring five candidate forums across the state in the next month on the issue of school funding and property taxes. Anyone wishing to attend a forum or to learn more about school funding can visit NHSFFP’s website, www.fairfunding nh.org.)