New Hampshire was set to say goodbye next month to its controversial school finance system that borrows from wealthier districts to send property-tax money to schools in poorer areas.
Support for that plan—laid out in a law passed last year—unraveled, however, as the legislature neared its final weeks. Lawmakers instead made modest changes to the school aid formula that attempt to boost the system’s legal standing while providing slightly more funding to poorer schools.
Legislators from both Republican-controlled chambers agreed May 25 on a bill that keeps the old school aid system mostly intact, while reducing state property taxes. Gov. Craig Benson was expected either to sign the new legislation or let it to become law without his signature.
Legislators from wealthier areas who see the state’s property-tax system as unfair were disappointed that they will still have to share revenue with less affluent districts. Even advocates for low-income communities gave the changes a lukewarm review. The bottom line: “We’re perpetuating kind of the status quo” on school funding, Senate spokesman Mark C. Vattes said.
Even if the changes were relatively minor, it wasn’t for a lack of trying to do more.
Sans a state income tax, New Hampshire relies on state property taxes to pay for schools. Early in the session, the Senate debated a bill that would have affirmed the end of state property taxes and allowed the revenues to stay with local governments. The state still would have supplemented poorer districts through additional grants to those districts.
The Senate bill also would have tweaked the school finance formula even further to benefit some wealthier districts by allowing them to keep more of their local tax revenue. Then, the House proposed a cigarette-tax increase to add more money for education, which, in turn, drew the interest of Gov. Benson, a Republican, who threatened to veto the tax increase.
A letter from state Attorney General Peter W. Heed then surfaced and broke the logjam by indicating to state leaders that both the Senate proposal and the school finance plan already on the books were unconstitutional. Among Mr. Heed’s reasons: Neither the law scheduled to take effect next month or the Senate bill would have set an “adequate” level for student funding as the state supreme court had required.
In the end, critics called the latest legislation just another failure to fix the school finance system as the state supreme court ordered in 1993.
“Our legislature and governor continue to show disrespect, not only for the constitution, but for the needs of poor children across the state,” charged Andru Volinsky, the lead counsel for the Claremont Coalition, named for one of the five districts that filed the finance suit against the state.
“We still haven’t gotten a strong, principled approach to school funding in New Hampshire,” Mr. Volinsky asserted.
Others worry that overall state spending on public schools will drop as lower state property taxes take effect. Statewide property taxes will fall from $4.92 for every $1,000 of property value in fiscal 2004 to $3.33 for every $1,000 of property value in fiscal 2005.
The New Hampshire School Boards Association took no position on this year’s legislation, but was worried that overall funding was declining and that state subsidies to districts with high numbers of special education students and those learning to speak English were eliminated in the new compromise bill.
“The state has not really addressed the question of defining adequacy,” said Dean Michener, the associate director of the school boards association. “Only after you define it can you really cost it out.”
The legislation will provide $3,390 in basic state aid for each student in fiscal 2005.
“I would challenge anybody to provide an adequate education for $3,400 per pupil,” Mr. Michener said. He added that the state is dedicating fewer tax dollars to K-12 schools than in previous years.
Some lawmakers claimed a limited victory in reducing property taxes and taking steps, in their minds, toward a system that is better than the current one.
“I, too, am not pleased with perpetuating a donor-receiver system,” Senate President Thomas R. Eaton said in a statement on the eve of the final vote. “However, in the current environment, we must choose among the lesser of all available evils.”
Mr. Volinsky said poorer districts were weighing their legal options. He claimed even the new legislation doesn’t meet the standard of the state constitution and that dividing up available state revenue and doling it out isn’t a proper remedy either. (“N.H. Court: Accountability a Constitutional Duty,” May 1, 2002.) Under the new plan, the cities of Nashua and Concord would gain some additional funding compared with last year’s levels, while the state’s largest city, Manchester, would lose some aid, Mr. Volinsky said.
The new plan, he argued, simply “mistreats different groups of children than last year’s plan.”
A version of this article appeared in the June 09, 2004 edition of Education Week as N.H. School Aid Changes Draw Little Praise