As school funding gaps persist, search for a solution continues

By: - February 14, 2022 5:43 am
Dollar bill stuck in a mini house

Some in New Hampshire argue that it’s time to eliminate the reliance on property taxes to fund public schools. (Getty Images)

For many New Hampshire communities, town lines can still make a major financial difference. 

In Brookline, residents in a house worth $200,000 are required to pay $4,140 in annual local school property taxes, the highest rate in the state. One town over, in Mason, a home valued at the same $200,000 carries a tax bill of $2,358. 

In Claremont, residents pay $19.64 in local education taxes for every $1,000 in assessed property value; just up the Connecticut River in Hanover, residents pay $9.01 per $1,000. Despite the lower property values of the less-advantaged towns, residents pay much more proportionally in taxes to fund their schools. 

As debates rage over critical race theory, education freedom accounts, and mask policies in schools, the question of school funding inequities has received less attention the past two years.

But the problem persists despite 30-year-old landmark state Supreme Court decisions and an ongoing 2019 lawsuit targeting the funding gaps. And this year, like years before, lawmakers say they have proposals for how to deal with the issue. 

One idea would inject more aid to schools while keeping the same funding formula. Another would uproot that funding formula and find new ways to distribute aid. 

Yet some advocates say both proposals are half measures. Their preference: that New Hampshire eliminates its reliance on property taxes to fund public schools.

A new take on ‘adequate’

According to Rep. Dave Luneau, the problem with New Hampshire’s school funding formula is that its creators have been looking through the wrong end of the telescope.

Currently, districts start out the same under the formula: Any district that can’t fund the minimum amount of tuition per public school student with local property taxes alone receives $3,786.66 per student at minimum. Then, districts receive additional funding for students who qualify for free and reduced lunches, require special education, are English language learners, or have fallen below the proficient level on the third-grade state assessment. Those additions can add thousands of dollars in annual state funding for the education of a student.

The system is based primarily on equal funding; adjustments are based mainly on the income profile of a district’s students. Luneau argues that’s a backward focus. Instead of orienting its state education aid around individual students’ economic status, the state should distribute the money based on a more meaningful metric: the ability for the school to provide adequate opportunity, he says.

“Keeping the flat formula and expanding the fiscal disparity aid is a really expensive way of doing that, because you’re essentially already distributing the state dollars, which is close to a billion dollars, and you’re distributing it fairly uniformly whether you’re Manchester or you’re New Castle,” the Hopkinton Democrat said.

Luneau’s proposal would reimagine the formula. His bill, House Bill 1680, would eliminate that default sum given to all districts that receive adequacy aid and replace it with a new calculation – an “opportunity budget” –  based on how much each district needs in funding to give children an equal opportunity to achieve the state assessment averages.

Under the bill, the Department of Education would evaluate each school district using criteria such as student assessment scores and graduation and attendance rates, as well as intrinsic factors that might make boosting those rates harder, such as population density and high-cost staffing.

Those evaluations would be fed into a formula to determine what the district receives from the state to create an equal opportunity for success. 

The idea: New Hampshire’s definitions of what constitutes an adequate education, and what needs to be funded, would be focused on the ability to improve student outcomes. 

The bill is driven by the conclusions of the 2020 Commission to Study School Funding, which Luneau chaired, and which found that New Hampshire’s unequal school funding system was forcing some towns to pay more in local tax dollars to achieve the same testing outcomes. 

Rather than pegging state dollars to the number of low-income students, the commission found that the Department of Education should tie the funding to schools that are falling behind on the metrics that determine whether students have equal opportunities. That could mean some districts that currently receive state aid get less, while others get more. The aid would be phased in gradually over the course of eight years. 

It is unclear exactly which districts would benefit from the realignment; the Department of Education has not carried out a fiscal analysis. But Luneau’s bill faces significant hurdles. Last week, the House Education Committee voted, unanimously, to recommend sending the bill to interim study to allow lawmakers to study it over the summer. That recommendation will arrive before the full House this week. 

Still, Luneau hopes the bill presents a new vision for school funding that could be bipartisan – particularly one that doesn’t raise state taxes. And he said that additional months to study the issue could help shore up that support. 

“What we do here has to be a durable solution,” he said. “And the way to do that is absolutely by working across the aisle.”

Targeted boost

Over in the Senate, Sen. Erin Hennessey has a more traditional idea to help lessen inequality: keep the current funding formula but give needy districts more aid.

In a bill with bipartisan support, Hennessey is proposing to give “property poor” towns – those with low property valuations – up to $650 per low-income student to augment the additional funding the districts already receive. Towns with equalized property valuations of less than $1 million per student would automatically get a $650 increase for students qualifying for free and reduced lunch. Towns with valuations up to $6 million per student would get a sliding scale of aid per student, while those with valuations of $6 million per student and greater would get no additional aid.

The bill would provide direct funding bumps to towns that have traditionally struggled. Pittsfield would receive $240,889 over the next two fiscal years, Claremont would get $854,060, and Berlin $678,123, according to an analysis from the Department of Education attached to the bill. Property-rich towns, like Hanover and Wolfeboro, would receive no aid. 

To Hennessey, the approach fits with what she says is Republicans’ larger vision for school funding: add support for traditional public schools to reduce inequity for the majority of students, while at the same time boosting alternatives for the minority, through charter schools, private schools, and homeschooling via education freedom accounts.

“(The question is) just what’s best for the kids that we have, and how are we going to best educate them?” Hennessey said. “And I think this is a good tool we can use to fund things in the state.”

The bill has also attracted buy-in from across the aisle; two Democrats, Sen. David Watters of Dover and the late Rep. Barbara Shaw of Manchester, sponsored the bill. And it appears to have momentum this year. It passed out of the Senate by a unanimous voice vote.

Hennessey says she sees the $650 aid provision as a potentially permanent addition to the funding formula.

“Now ‘permanent’ is dependent upon future legislatures,” she said. “But this is saying, ‘Hey, future legislators, we need to continue to look at this and make sure that we’re getting additional aid to the towns that need it the most.’”

Falling short

Yet as lawmakers tinker, some interested observers say neither proposal fixes the heart of the problem: property taxes. In testimony to lawmakers, the advocacy group New Hampshire School Funding Fairness Project argued that while additional aid to struggling districts was welcome, the solution needs to be a more robust educational investment in the state.

“HB 1680 would fall short of attaining the kind of comprehensive reform needed to ensure the state of New Hampshire fulfills its constitutional responsibility to provide an adequate education to every child,” said Jeff McLynch, the group’s director, in testimony to the House Education Committee after praising Luneau’s bill. 

Hennessey’s bill would keep the formula and build more aid on top; Luneau’s bill would revamp the formula but keep the state’s overall spending levels on education the same. To McLynch, both ignore the bigger goal.

“While there may be shared responsibility in delivering an adequate education, the responsibility for funding an adequate education for every child is the responsibility of the state of New Hampshire and the state’s alone,” McLynch said.

Luneau said the Legislature should use the funding and political momentum it has now.

“Working within the existing state’s resources, we can dramatically improve our ability to close opportunity gaps,” he said. That means the state’s thorniest education funding question – whether the state needs an income tax – can be sidestepped for now, Luneau said.

“That may be a discussion that continues forever in the state,” he added. “But if closing opportunity gaps is put on hold forever, while people debate that, then we’re not doing right for our kids.”

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Ethan DeWitt
Ethan DeWitt

Ethan DeWitt is the New Hampshire Bulletin’s education reporter. Previously, he worked as the New Hampshire State House reporter for the Concord Monitor, covering the state, the Legislature, and the New Hampshire presidential primary. A Westmoreland native, Ethan started his career as the politics and health care reporter at the Keene Sentinel.