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How NH Education Funding Got Stuck for Decades

Published Wednesday May 10, 2023

Author Dave Solomon, Granite State News Collaborative/

Rockingham County Superior Court Judge David Ruoff is presiding over the lawsuit brought by ConVal and multiple other New Hampshire school districts. Photo: Keene Sentine

Natalie Laflamme, a successful Concord-based attorney who graduated in the Berlin High School Class of 2007, finds herself in a bit of a paradox. Educated in one of New Hampshire’s poorest school districts, she launched a successful law career and is now partnering with well-known New Hampshire attorney and politician Andru Volinksy in the latest legal challenge to the state’s system of education funding.

Defenders of the status quo might ask, “If the Berlin school system is so underfunded, how does it produce graduates like Natalie Laflame?”

“That’s a tricky question,” she says, “because I like to think I turned out OK, so I can’t say the schools are awful and it’s all the state’s fault, but I’m not naïve to think we had the same resources as other places and we knew that when we were in school, the textbooks were not super updated, and other things.”

It’s gotten worse in the 16 years since Laflamme graduated. In 2019 Berlin compressed all grades into two buildings, combining kindergarten through fifth grade in one elementary school, and sixth through 12th grade at the high school.

“They had to stop offering calculus at one point; then they didn’t have chemistry; so just stuff like that. The way I look at it, I think the students who have fewer needs can be fine. I was going to be OK in whichever district I ended up in, but what worries me more is the student with special needs. They are the ones hurt when the school is under-resourced. There are fewer opportunities for students who might be gifted as well.”

Laflamme was a second-grade student in Berlin when Volinksy and his partner John Tobin prevailed in the Claremont lawsuits of the 1990s. In the first Claremont ruling 30 years ago, the Supreme Court ruled the state had an obligation to fund an adequate education. In the second Claremont decision in 1997, the court ruled New Hampshire’s reliance on local property taxes to fund education was unconstitutional.

The legislature and governor were ordered to define the components of an adequate education, establish the cost and pay for it with taxes that were levied equally across the state.

Mandate on NH education funding unfulfilled

Three decades later the mandate remains unfulfilled, according to Volinksy and his partners, who are back in court with another lawsuit over education funding scheduled for trial in September (Rand v. NH). The same judge now presiding over an education funding lawsuit filed by the Conval School District, Judge David Ruoff of Rockingham County Superior Court, is expected to preside over Volinksy’s latest action as well.

The ConVal lawsuit, joined by 19 other school districts, has been working its way through the courts since 2019. The legal record is littered with its predecessors, including the first two Claremont decisions; the Sirrell lawsuit in 2001 challenging the statewide property tax; a third Claremont lawsuit in 2002; lawsuits by Londonderry in 2006 and Dover in 2016 over how aid is distributed.

The number of lawsuits over education funding in the past four decades is exceeded only by the number of committees or commissions established to study the matter and recommend changes.

They include the 1984 Augenblick Report; Gov. Jeanne Shaheen’s 2000 Commission to Analyze the Economic Impacts of Various School Funding Revenue Options; New Hampshire's Quest for a Constitutionally Adequate Education (2006); Joint Legislative Oversight Committee on Costing an Adequate Education (2008); and the Committee to Study Education Funding and the Cost of an Opportunity for an Adequate Education (2018).

And yet, according to most observers, the state hasn't made much progress toward the goals of the Claremont rulings.

According to a 2017 report by The New Hampshire Center for Public Policy, “There is still wide variation in local tax rates as well as per pupil expenditures, a leveling of which was at the heart of the Claremont lawsuit. There is still more than a two-fold variation between those communities that spend the most on educating students and those that spend the least. Variation in rates for local property taxes is even greater.”

A system that doesn’t work

More recently, the Report from the Commission to Study School Funding, submitted to the state Legislature at the end of 2020, concluded from its hearings that, “All public input recognized that the current funding system, dependent on local property taxes, does not provide an equitable opportunity for an adequate education for all students regardless of where they live.”

The current system of public-school funding is not working in the opinion of most Granite Staters, according to the commission, which involved lawmakers and a variety of stakeholders and included hearings across the state.

There are reasons this problem has been so intractable, related to the state’s political culture; its identity as the only state besides Alaska without broad-based taxes; and, as the 2020 commission states, a lack of consensus on how to raise the money otherwise.

It didn’t have to be this way. The state had a chance to target aid to the neediest school districts before the Claremont decisions restricted that option, requiring the state to give every community, regardless of wealth, the same adequacy grant.

Property poor towns filed a lawsuit against the state during the administration of John H. Sununu, the current governor’s father, but agreed to withdraw the lawsuit in return for promises of increased state aid where it was most needed.

The Augenblick report of 1984 provided a formula the state could use to equalize education to some degree by targeting aid, while still remaining at a very low level of state funding compared to other states. But the state Legislature never funded the formula at meaningful levels, leading up to the lawsuits of the 1990s.

“Unfortunately, that train left the station,” says former state Supreme Court Judge Chuck Douglas, now an attorney in private practice. “Ever since then there’s always been a case bubbling up here and there and now of course the major one that’s being tried.”

The ConVal lawsuit trial proceedings ended and a decision is awaited from Judge Ruoff.

A failed search for solutions

Douglas, who served in the U.S. Congress as a Republican, partnered with Democratic Gov. John Lynch during Lynch’s tenure in an attempt to reach what many view as the only practical solution consistent with New Hampshire’s political realities — a constitutional amendment addressing the Claremont rulings and allowing the state to target aid.

“The state’s role should be to target, to smooth out the peaks and valleys,” Douglas said. “Claremont and Rye don’t need the same aid; and New Castle and Pittsfield don’t need the same aid. The problem is the Claremont opinions seem to prevent that. During the John Lynch era (2005-2013) I worked with the governor, and we tried to get a constitutional amendment that would allow targeting.”

The proposed constitutional amendment never got the supermajority needed to clear the state Legislature, and so was never presented to voters. Democrats bucked their own governor, worried that the state Legislature, freed of court supervision, would be as unreliable on school funding as it was in the Augenblick days.

“That is the big debate,” says Laflamme. “People who say we should just fix the system take the approach of targeting the schools that need it, but that’s not what the constitution says. It’s the state’s responsibility, and if you remove that whole idea what’s to stop the state from saying, ‘We changed our mind; we are not going to help the towns anymore.’”

Education has historically been a shared responsibility between the state and municipalities, says Douglas. The idea that the state should fully fund the cost of an adequate education for every community in the state, no matter how wealthy, will never be brought to fruition, he said.

“If the state has to pay 100% of the cost, that’s about $17,000 per pupil statewide,” says Douglas. “That’s going to require a sales or income tax, and that’s not happening. And no court is going to jail 424 legislators and hold them in contempt until they appropriate billions of dollars in state money to be spent locally.”

A possible path forward

The most likely path out of the gridlock, and it’s no guarantee, is for one of the cases now before Judge Ruoff to work its way up to the state Supreme Court, which could overturn or at least reformulate the Claremont decisions.

“We had a full-court press (for a constitutional amendment) and we fell short, and that’s a shame,” said Douglas. “I don’t think there’s been a real effort in the past 13 years to put it to the voters, so it’s going to come down to the five justices of the state Supreme Court, to bring some reality to the situation. None of the five original Claremont judges are still there, so it’s a chance to take a look at an opinion that needs to be narrowed.” 

Three of the current justices have been appointed by Gov. Chris Sununu, who favors targeting.

“You don’t have to overrule Claremont by 100%,” says Douglas. “You just have to be able to nuance it and say it’s a shared responsibility, not an exclusive one, and you can target the aid so as to help the inadequately funded districts get up to a better educational standard by state funding. And if you allow that, you have solved the problem. Not to the Claremont litigant’s satisfaction, because they want a big check from the state, but at least you get them more money than they are going to get today.”

Spending more than ever

Drew Cline, executive director of The Josiah Bartlett Center for Public Policy, cites a report recently released by the free market think tank on the increase in education spending in the state, even as enrollments have declined. (Cline is also chair of the state Board of Education but was interviewed for this article solely in his role at the Josiah Bartlett Center.)

State and municipalities combined are spending plenty on education, he said. It’s all a matter of how the dollars are distributed.

“If we could just take what’s in the Education Trust Fund that comes in from business taxes and lottery taxes, and with adequacy grants say, ‘Hanover and Bedford you’re going to get a little less per pupil than Charlestown and Claremont because you have the means to lavishly fund your schools and they don’t, so we’re going to help them out,’” says Cline.

“We almost all agree that the state should help the property poor towns by giving them a little more,” he said, “maybe a lot more than they give the property rich towns, but under Claremont we can’t do that.”

The problem with that solution is that the statewide property tax is an important funding source for the Education Trust Fund, and past efforts to leverage property wealth in one New Hampshire town to benefit another have not fared well.

For 10 years after it was first introduced by Shaheen in response to the Claremont rulings, a portion of statewide property tax receipts from wealthy communities was used to the benefit of the property poor cities and towns. When that practice stopped under political pressure from the wealthier communities in 2011, the rich towns started keeping every penny collected. In effect, the rich got richer, and the poor got poorer.

“It’s on their property tax bill,” says Cline. “It’s the psychology of paying that property tax. You expect it’s going to stay in your community.”

A shared responsibility, or not?

There’s a reluctance among many in the Granite State to view the property wealth of New Hampshire’s coastal and lakefront regions, its centers of commerce and industry, its tourist attractions, as something that benefits the entire state, not just the communities in the lucky geography club. That, perhaps more than anything else, has prevented a long-term solution, and no court ruling on targeting is going to change that.

“We need to stop thinking about how it’s raised and redistributed,” says Laflamme. “The statewide property tax is raised as a state tax on all properties in the state and it should all go to the state. We need to break through the idea that this is my local money going to your town.”

After all, says Laflamme, other statewide taxes don’t work that way. Receipts from the rooms and meals tax don’t go back to the communities from which they were generated, same with business taxes, and so on.

The bipartisan 2020 commission, which raised some hope on school funding, points to this key stumbling block in its opening statement: “The reliance on local property taxes to fund public schools is undesirable, but there’s no consensus on alternative forms of revenue.”

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