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New Hampshire Districts Drop Finance Lawsuit

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Citing a new finance formula that will nearly double their state aid in 1986, seven property-poor New Hampshire school districts and the 21 others that supported them have dropped their four-year old school-finance suit against the state.

Lawyers for the plaintiffs announced last Wednesday that they had filed a motion in state superior court to have the case, Jesseman v. New Hampshire, marked a "voluntary nonsuit," according to a written statement. Arthur Nighswander, one of the lawyers, said the districts decided to drop the suit because the facts of the case had changed and further litigation would have been too costly.

"We still believe that public education is a fundamental right of all children in a democracy; that the state has a constitutional duty to provide an equal opportunity for children whether they live in property-poor or property-rich districts; and that a system of financing education which relies almost entirely on the local property tax is discriminatory," the statement reads.

But with the adoption of a new fi-nance formula, "the state appears to have recognized its responsibility and the inequities in the past system ... [and] it is the feeling of the plaintiffs that the suit has achieved one of its major purposes," the statement says.

Challenged Property Tax

Like similar school-finance suits in other states, Jesseman v. New Hampshire had challenged the constitutionality of the state's reliance on property taxes to finance education.

In New Hampshire, however, the case took on added significance, because the state, which levies no sales or income tax, provides the smallest share of K-12 costs of any state in the nation--about 6 percent. As a result, the school-finance system has been almost wholly dependent on property taxes.

Also, the state has traditionally distributed much of its aid to districts on an unequalized basis and has never fully funded its foundation-aid program.

As a result, the plaintiffs argued, property-rich districts were often able to raise and spend more than twice as much as poor districts, producing huge disparities in the ser-vices that districts provide to students.

The plaintiffs argued that the system violated the equal-protection clause of the state constitution and that it was the state's responsibility to remedy the disparities. Lawyers for the districts spent two years gathering data and taking testimony to establish the facts of the case, but in February of 1984 the state supreme court refused to hear the case and sent it back to superior court for additional findings.

Augenblick Formula

Before the courts took any further action, the legislature adopted and the governor signed a new school-finance formula earlier this year that more equitably distributes state aid to districts. At the same time, the state increased its school aid by about 50 percent.

The new formula, devised by the school-finance consultant John Augenblick, directs state funds to districts based on a complicated measure of their need. It assigns weights to different categories of students based on how much it costs to educate them, and takes into account each district's property wealth, income, and local tax effort.

Many of the districts that were parties to the lawsuit will benefit greatly from the new formula. According to Mr. Nighswander's written statement, "The supporters of the action will receive over $6 million more in fiscal year 1986," including one district that stands to gain more than $570,000.

However, the plaintiffs were not entirely happy with the changes in the finance system, and two of them held out against dropping the suit, until their lawyers convinced them that it would be more difficult to win the suit given the change in the finance formula.

"It's not that the distribution of the money is wrong; the source is wrong," Mr. Nighswander said, referring to the system's continued reliance on property taxes. "That makes it a much tougher case."

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