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N.H. State-Aid Increase Could Result in End of School-Finance Suit

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One of the most closely watched school-finance suits in the nation could be dropped in the next few weeks if the New Hampshire Senate and Gov. John H. Sununu agree to raise state foundation aid to a level already approved by the House.

Governor Sununu has threatened to veto the legislation, but he may be forced to accept it or veto the entire state budget.

A lawyer for the plaintiffs in Jesseman v. State of New Hampshire confirmed last week that letters have been sent to school districts asking them whether they want to pursue the suit regardless of the possible increase in foundation aid. A pretrial hearing in the case, which the state supreme court sent back to a trial court in February 1984, was scheduled for May 1.

'Effective Relief'

The lawyer, Jack Middleton, said he did not yet know how the districts would respond to the possible infusion of state funds. "As far as we know, the plaintiffs want to continue," Mr. Middleton said. "Unless the state does something fairly dramatic, we're going to have to continue."

But when asked if the suit might be dropped, he added, "I think that's a possibility." He said he thought the increase approved by the House would provide "pretty effective relief" for the plaintiffs.

The Jesseman case dates from October of 1981, when seven relatively property-poor school districts filed suit against the state, arguing that its school-finance system relied too heavily on local property taxes. The system, they contended, produces huge disparities in what districts raise, spend, and provide in the way of services to students.

They also claimed that the state had failed to fund its foundation-aid program adequately.

Twenty-one other districts have helped pay for the suit.

In New Hampshire, the state provides only about 7 percent, or about $40 million, of precollegiate education costs, by far the lowest proportion of any state in the nation. The state raises no sales or income tax and has a long tradition of local control. Some districts spend as much as $4,000 per child, while others can afford no more than $1,000, the plaintiffs allege.

Although the state department of education estimates that it would take $50 million to fully fund the foundation-aid program that is already on the books, the state contributed only $3.6 million to it in 1985.

The case reached the state supreme court in 1983, but in a set-back for the plaintiffs, the court sent it back to Merrimack County Superior Court for a finding of fact on whether students in wealthier districts actually do better academically than those in poor districts. In essence, the high court held that there was no point in settling the broad constitutional questions the case raises without first determining the impact of the alleged inequities in spending.

In other states where the courts have focused on "outputs"--student achievement--rather than on "inputs"--district finances--the plaintiffs have not fared well.

$22-Million Increase

House Bill 4, the school-finance measure, passed in the New Hampshire House unanimously in April. Last week, the House transferred the funding portion of the bill to the budget. If the Senate follows suit, the Governor would have to veto the entire budget to stop the increase.

Governor Sununu has proposed raising the foundation aid this year from $3.6 million to $5.4 million. The House measure would increase it $22 million more over two years, according to Rep. Ellen-Ann Robinson, a Republican and the bill's prime sponsor.

The House measure would also consolidate four existing school-aid programs into a new foundation-aid formula devised by John Augenblick, a consultant in school-finance matters.

The formula, which Governor Sununu has endorsed, assigns weights to different categories of students on the basis of how much it costs to educate them and factors in a district's ability to pay, based on a comparison between its property wealth, income, and local tax effort, and statewide averages.

Districts whose fiscal capacity matches the statewide average would be funded at 8 percent, according to Representative Robinson; those with lower capacity would get a higher percentage, and those with a higher capacity would get less.

A hold-harmless provision in the bill would protect high-capacity districts from losing state aid for one year and would limit annual declines to 25 percent for each of the next three years, Representative Robinson said.

The four funding sources folded into the foundation aid would include: the present foundation aid, sweepstakes aid, business-profits tax receipts, and basic aid to special education. Governor Sununu has said he favors combining the foundation and the sweepstakes aid, but has vowed to let the business-profits tax expire.

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