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Education Funding Battle Heats Up... Again

Published Wednesday Sep 11, 2019

Author Sheryl Rich-Kern

Across party lines, educators and lawmakers want to help cash-strapped cities and towns increase funding for local school districts. That’s why budget negotiators proposed $138 million in targeted aid for fiscal years 2020 and 2021 and $40 million in unrestricted funds for municipalities in the form of revenue sharing.

The proposed budget would have infused the state with the largest wad of education dollars in at least two decades, according to Rep. Mary Jane Wallner, D-Concord, chair of the NH House Finance Committee.

However, as the state receives yet another judicial reprimand to fix its education funding methods, attempts to do so have hit yet another roadblock in Concord.

As of June 28, Gov. Chris Sununu vetoed the legislature’s two-year budget of $13.3 billion, as it is $200 million more than what he proposed in February, and he says has put “our booming economy at risk.”

Most notably, the governor objects to cuts in business taxes and the use of a one-time surplus of $260 million to offset expenses. Meanwhile, legislators passed a resolution allowing state departments to operate on last year’s funding rates through Sept. 30. 2019.  

The governor’s veto places on hold another development: the establishment of a 16-member commission to redesign the state’s adequacy education formula and submit suggestions before Sept. 1, 2020.

Suing the State
Earlier this year, the ConVal Regional, Winchester, Monadnock and Mascenic school districts sued the state for dodging its constitutional directive to educate its kids with ample funds.

New Hampshire Superior Court Judge David Ruoff in Cheshire County agreed. Yet even before he ruled in a 96-page document that the state is not meeting its obligations, lawmakers were strategizing how to create a sustainable funding model.

State law requires all schools receive an adequacy aid award of at least $3,562.71 per student, based on a formula the legislative committee established in 2008. Plaintiffs in the ConVal lawsuit say this calculation is a slim fraction of actual operating costs.

Ruoff wrote that, “not a single school in the State of New Hampshire could or does function at $3,562.71 per student.” The state formula, he wrote, does not factor in costs such as school busing, teaching salaries, utilities or building maintenance.
Ruoff cites the state’s appraisal of $315 per student for transportation. In contrast, the NH Department of Education estimates the average per pupil transportation cost at districts with more than 10 students is more than twice that, at $827.56.

In another example, the judge examined how the state lowballs what school districts pay to keep the lights and heat on and clear the driveways in the winter. The state assigns $195 per pupil for facilities operation and maintenance. Yet ConVal spends approximately $500,000 in oil/gas, another $500,000 in electricity and more than $160,000 in snowplowing, bringing the cost of plant operations to more than $1,400 per student.

History Repeats
The shortfalls Ruoff illustrates give anyone following NH’s history of public-school funding a sense of déjà vu. Nearly 25 years ago, as a result of a the so-called Claremont Lawsuit filed by the Claremont, Franklin, Berlin, Pittsfield and Allenstown school districts, the NH Supreme Court ruled the state must raise enough tax revenue to give students an adequate education.

In response to the 1998 ruling, the Legislature devised a statewide education property tax (SWEPT). Although counted as state funds for accounting purposes, SWEPT dollars remain in the local municipalities where they are generated. Designed in 2005 to raise $363 million per year, SWEPT funds have not been adjusted for inflation. They contribute about 40 percent of the monies needed to support minimum standards for an adequate education. The rest comes from other revenue sources, such as business taxes and room and meals taxes.

For fiscal year 2020/21, the state apportions $3,709 per student. Some districts receive more funding for children on free and reduced lunches, which is the only metric the state employs to identify students living below the poverty line.

Meanwhile, according to the NH Department of Education, the costs per student exceed $18,000. Affluent towns inch closer to raising enough from local property taxes, while property-poor towns are forced to choose between hiking tax rates or cutting school programs.

In 2008, the Legislature attempted to close the inequities among towns with fiscal capacity disparity aid, providing additional funds for property-poor communities with median family incomes lower than the state average. In 2012, lawmakers modified the funding formula by eliminating fiscal-capacity disparity aid and replacing it with dollars allocated to specific subsets of students, such as English language learners and students with special education needs.

However, that alteration incurred a $158-million loss. To make up the difference, the legislators implemented “stabilization grants” for struggling school districts. However, in 2016, lawmakers voted to reduce these stabilization grants by 4 percent each year, phasing them out for the next 25 years.

Budget Cuts
In Pittsfield, cuts to stabilization funds dig a hole that is $87,000 deep, according to John Freeman, Pittsfield school superintendent. While the district’s $10-million school budget increased 3.4 percent over the last 10 years, local education property taxes surged 48 percent.

 To maintain Pittsfield’s school budget, Freeman says the district eliminated a coordinator to help students get credit for outside activities, such as working with the local newspaper, studying genetics at UNH and riding horses to meet gym requirements—many of which are opportunities for students to explore careers.

The district also had to cut core subject teachers. Today there are no foreign language teachers, only a paraprofessional in a classroom monitoring students running Rosetta Stone software.

“I certainly sympathize with legislators for having difficulty solving this,” says Freeman, “but it is their problem to solve and they’ve been directed to do so by the Supreme Court. It just hasn’t happened yet.”

Berlin is another community feeling the effects from lack of funding. Liz Canada, policy director for Reaching Higher NH, an education policy nonprofit, says she spent time visiting elected officials and school board members and school staff, where she learned that some parents of school-aged children are still without jobs after the closing of the mill.

In Berlin, the fallout from the 4 percent slash in stabilization-grant monies led to the school district, with an annual budget between $16 million and $18 million, losing approximately $220,000 annually. This year alone, it received about $660,000 less from the state. Over three years, that adds up to $1.3 million, leaving the town and the school board to face a last resort this past January: shut down its elementary school serving K-2 students.

It was a bittersweet mid-June afternoon for the 256 students and nearly 30 teachers packing up boxes at Brown Elementary School. This fall, students and staff are relocating to another 100-year-old building formerly designed for high schoolers,  not for young children.

“Had the funding issue not been a problem, we would not have had to make the decision in the ninth hour to close another building,” says recently retired Superintendent Corinne Cascadden, who also grew up in Berlin. “We didn’t have any time or funding for renovation or upgrades.”

Cascadden says the Berlin school district decreased its staffing by 21 positions since the onset of the stabilization grant cuts. “Every time we had a position open, we didn’t fill it. Everybody has to wear multiple hats,” Cascadden says. “If they don’t come up with an equitable formula, then the programs that kids get in Portsmouth I’m sure can’t be offered in Berlin,
New Hampshire.”

Property-poor communities like Berlin face a cycle that’s difficult to disrupt, says Canada. National forests and federal prisons, which are nontaxable, comprise 60 percent of its geography. The city needs more industry to lower its tax rates, while at the same time, its high taxes ward off potential investors from setting up shop, she says. That leaves Berlin without a lifeline for attracting new residents and delivering jobs, good schools and affordable housing,  Canada explains.

Success in Adversity
Despite funding challenges, Canada says, “There’s a significant amount of innovative work that happens in public education in New Hampshire. Educators make the most of what they have.”

New Hampshire ranks fourth in educational achievement behind Massachusetts, Connecticut and New Jersey, according to the 2019 Kids Count Data Book by the Annie E. Casey Foundation.

New Hampshire students score significantly higher than the national average for National Assessment of Educational Progress (NAEP) assessments in at grades 4, 8 and 12.

There’s no question NH taxpayers are deeply committed to the quality of public education, says John Tobin, one of the attorneys for the plaintiffs in the landmark Claremont Lawsuit, and a leader in the current NH School Funding Fairness Project.

But laudable rankings do little to mask the wide swings in disparity from town to town. “It’s an arbitrary system,” Tobin says. “It doesn’t make sense that kids in Moultonborough get a better education because they have a lake.”

Tobin has been traveling throughout the state to demonstrate the inequities in education funding. He cites, for example, Milford and Portsmouth, both with around 2,200 students. Milford spends $15,994 per child compared to Portsmouth’s $18,346. Yet, its equalized education tax rate is almost triple that of Portsmouth.

Smaller towns such as Pittsfield and Rye, with just under 600 students, are also a study in contrasts. Pittsfield spends $16,161 per child compared to Rye’s $23,123. Yet Pittsfield’s equalized education tax rate is more than triple that of Rye.

Figuring Out the Future
Wallner acknowledges that budget writers progressed in their negotiations, but their efforts toward a long-term solution are only in their infancy.

Before the governor’s veto, lawmakers agreed to suspend cuts in stabilization grants and restore funding to its 2012 levels. They also added “fiscal-capacity disparity aid” to municipalities that lack a prodigious tax base while also fully funding kindergarten.

That disparity aid would have bolstered Berlin by more than $1 million in 2020 and more than $3 million in 2021. Pittsfield would have received just under $417,00 for 2020, but close to $1.3 million the following year.

Manchester would have received an additional $15.25 million, and Nashua another $5.16 million.

Targeted aid per student would have continued at current levels with those on free and reduced lunch at $1,854, English language learners at $726, special education students at $1,995 and those not meeting third grade reading levels at $726.

But as kids get ready to fill the classrooms in a few weeks, these spending initiatives lie in gridlock. The annual 4 percent cuts to stabilization grants, which two-thirds of NH’s school districts receive, kick in again this summer.

Brokered discussions on the two-year state budget will likely chug along throughout the summer.  

“The school funding provisions in the budget would have been a meaningful step in the direction of complying with the New Hampshire Supreme Court’s order 25 years ago in the Claremont case,” says Tobin. For now, communities with a smaller taxable-property base will need to adjust their tax rates to preserve existing school programs while the legislature figures out how to pay for an adequate education.

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