October 29, 2020

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School funding method used across N.H. isn’t fair to students or taxpayers

8 min read
Using 10 years of the state’s own data, a team of independent analysts, hired by...

Using 10 years of the state’s own data, a team of independent analysts, hired by the Commission to Study School Funding, has stacked up the evidence to prove “something that a lot of us may have felt for a long time,” the commission chairman Rep. David Luneau of Hopkinton said at a recent meeting.

“To see it in writing,” Luneau suggested, brought a “new level of meaning and recognition” to the experts’ key finding: “New Hampshire’s existing school funding system is inequitable from both student and taxpayer perspectives.”

Cities and towns “with higher poverty rates and lower property wealth are doubly penalized,” according to the report, which was prepared by the American Institutes for Research (AIR) and presented to the commission over the past several weeks. School districts with the highest number of economically disadvantaged students spend less, on average, than districts with the fewest needy students. Communities with the least property wealth “impose the highest local education tax rates to be able to fund their children’s education,” the report concluded.

One chart dramatically illustrated the impact on students of the inequities in New Hampshire’s school funding system. That data clearly shows that the school districts in less wealthy communities, that spend less but have the highest level of disadvantaged students, perform below the state average, based on student assessment scores, graduation and attendance rates. That evidence of inequitable outcomes across school districts “justifies the need for funding reform,” the report said. Students in those high-need districts “are not being provided an equal opportunity to learn,” the report concluded.

While parents, and teachers and school staff grapple with concerns about whether school doors will open at all in the COVID-19 crisis, the long struggle over the way New Hampshire’s funds its schools moves on, but with renewed energy.

Tomorrow, the 17 commissioners resume examination of the AIR report but they remain far from adopting any recommendations to revamp the current school funding system. On Thursday, the state Supreme Court will hear oral arguments in the latest school funding lawsuit – litigation that could open the door for the justices to review the language and directives in a long line of school funding decisions that date back to 1993. The new case, brought by the Contoocook Valley School District and three others in southwest New Hampshire, is backed by 26 additional school districts, including Concord, Manchester and Nashua.

Despite decades of hard fought battles in the state courts about fairness and marathon wrangling in the state Legislature about costs, the AIR researchers concluded that current system “is not working for large segments of New Hampshire students and taxpayers.”

A school funding formula should give every child, no matter where they live or what their needs may be, an equal opportunity to achieve a common set of goals in school, a baseline that the AIR researchers have developed as a national model, and used in other states. For “equal opportunity” to happen here, the system needs to change, their analysis showed.

A new formula to pay for schools

What AIR has put before the commission is a new funding formula that would fundamentally change the way New Hampshire has financed public schools for decades – ever since the state Supreme Court declared that every child is owed an “adequate education,” paid for by the state. The AIR models preserve New Hampshire’s historical commitment to property taxes, which now fund more than 70% of school costs, through local education taxes (at widely varying rates depending on property wealth) and the Statewide Education Property Tax (levied at a rate set by the state but retained locally). The AIR proposals – there are two versions – would pool local and state education property tax revenue in Concord and then distribute state aid, recognizing that some school districts, with the highest student needs, require more resources than others to provide every student equal educational opportunities.

“The funding of an adequate education should be better shared so that communities with the least wealth do not have to tax themselves exorbitantly to raise sufficient revenue to provide schooling,” the AIR report concluded.

Veterans of school financing wars know that the concept of sharing the wealth for education has been defeated before by coalitions of wealthy communities. But, they also wonder whether there is a greater willingness now to address economic inequities – to close the gap between property-rich and property-poor communities – than there was 27 years ago when the struggle over money for public schools began.

Whether the commission endorses some or all of AIR’s proposals – which education reform advocates favorably described as promising – the bottom line is that the future of real education finance reform will ultimately be decided in the State House.

“It’s really up to the Legislature and governor to determine how the state goes about funding its public schools,” Luneau reminded his fellow commissioners.

Public outreach

Advocates for education reform, recognizing the potential impact of November’s statewide elections, have ramped up their efforts to marshal public support for the commission, which plans to deliver its report to the governor and Legislature on Dec. 1 for consideration in the 2021 legislative session.

The nonprofit N.H. School Funding Fairness Project, which has led a statewide grassroots effort to generate public support for school funding reform and property tax relief, has invited the public and all candidates for the House and Senate and Executive Council to join in five “virtual regional forums” in late September and October. The project, which is funded by the N.H. Charitable Foundation and others, has gathered 400 signatures on a petition supporting the commission’s work, which it will present to the members tomorrow. “Reaching Higher New Hampshire,” a nonpartisan think tank that analyzes public education policy issues, and has testified before the commission, is producing a video – due for release in October – in an effort to unravel school funding complexities for a general audience.

And in what must be a first, the School Funding Fairness Project is also hosting a “Supreme Court Virtual Watch Party” this Thursday, on Zoom, for those who want to see the Attorney General’s office attempt to persuade the high court to overturn a lower court decision last year that declared the current school funding formula unconstitutional. An attorney for the School Funding Fairness Project will provide commentary after the arguments.

What is an ‘adequate education’?

Since the 1990s, any analysis on school funding in New Hampshire begins with landmark rulings by the N.H. Supreme Court and how to define an “adequate” education, a task that has frustrated lawmakers on both sides of the political aisle for years. In the state law books and rules, “adequacy” is defined by a list of items that reflect school operations – curriculum, transportation, food services, career, technical and health education, textbooks and supplies.

The AIR analysis, conducted for the commission just this summer, proposes a totally new definition of “adequate.” Instead of asking, “Is your library good enough,” commission member William Ardinger said last week, this formula asks, “Are your kids in your district reaching an achievement outcome that shows they are getting a fair shake?”

To answer that, the AIR researchers began with two factors. First, the report said, studies show that New Hampshire “is among the top performing states nationally on achievement tests.” Second, according to recent census figures, New Hampshire’s per pupil spending, on average, is among the highest in the nation.

On that basis, the AIR researchers concluded that a fair standard for “adequate” would be the average New Hampshire school district performance, which would be measured by “outcomes” – assessment scores, graduation rates and attendance. How a school district performed, either above or below the “average,” would be a guide for identifying whether every student in New Hampshire, no matter where they live, is getting the opportunity for an adequate education, as the courts have repeatedly said the state constitution requires.

For example, using those outcomes as a measure, four of the five “property poor” communities that launched the battle over school funding more than 25 years ago – Claremont, Franklin, Pittsfield and Allenstown – stand out as underperforming schools; the fifth, Lisbon, is slightly below average. Berlin, where local and school officials have been especially outspoken about the need for more funding, falls significantly below the average performance. Manchester has one of the lowest outcome performance scores in the state. In contrast, among those districts ranked as overperformers are Hanover, Bedford, Oyster River, Rye and Souhegan school districts. Concord’s outcome score was somewhat below the average; Hopkinton was above average and the outcome score for Bow and Pembroke was average.

The researchers calculated what it would cost school districts with a high number of students with needs – low income, English learners and special education students – to attain the “average” performance level, the new definition of an adequate education. For example, the reports figured that Berlin should be funded at $22,686 per pupil, but actual state and local revenue is $16,395. Similarly, funding for Pittsfield, according to AIR’s formula, should be $22,773 per pupil but is actually $17,907. Manchester is underfunded by about $10,000 per student, according to the AIR report. Meanwhile, Hanover is spending $23,462 per pupil, but could offer the average – an adequate education – with funding at $14,102.

AIR has laid out two models for a new funding formula that would address disparities in school funding – and local property tax rates – by directing state education tax revenue to cities and towns through a central fund in Concord. Neither model would raise new revenue. According to the researchers calculations, the restructuring would mean 167 of 237 towns (70%) would see a decline in their education property taxes, the report said.

Under one scenario, which attempts to recognize local capacity to raise educations funds, communities would make a minimal contribution of $5 per $1,000 of assessed toward education costs. The Statewide Education Property Tax would be set at $7.24, raising in total, when other non-property tax sources (like the Education Trust Fund) are included, $2.9 billion, which is what the state currently spends per year for schools. In this model, places with lower per-pupil costs but higher capacity to raise revenue, tax rates would increase and state and local funding decrease, the report said.

Under the second AIR model, no locality would be responsible for raising local education taxes. Instead, there would be a single, statewide property tax at $12.05 for every $1,000 of assessed value.

Fairness for all students and taxpayers

The team from AIR emphasized that the goal is not to provide equal funding dollars across the districts, because the reality is that some communities with high capacity to raise money will choose to raise and spend more on education than others. AIR’s funding formula is designed as a basis that would level the field statewide, giving all students, whether they live in a property-rich or property-poor town, an equal opportunity to achieve in school.

At a working group meeting last week, Rep. Mel Myler of Contoocook, the chair of the House Education Committee and a relentless supporter of education reform, called the AIR approach “a fundamental shift” in how the state would try to provide opportunities “for kids across the state who haven’t had it before.” And, he said, “it is going to be a difficult sell.”

“But I think we’ve got the data … that cannot be denied,” he said, his voice rising. “Kids are not getting equity in this state. That’s the message.”

The AIR report, as well as graphs and charts, are available at https://carsey.unh.edu/school-funding-study/resources.

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