N.H. Lawmakers Go Home With No Funding Plan

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After spending six months working on a new system to finance public education in New Hampshire, the legislature last week reached the end of its session with nothing to show for its work.

But instead of adjourning for the year on June 30, the House recessed. That means lawmakers can come back later this year and once again address the issue that has dominated this legislative session: the state supreme court's December ruling that the current method of paying for education is unconstitutional. ("School Finance Ruling Raises New Tax Questions in N.H.," Jan. 14, 1998.)

The Senate is also enjoying some vacation time but could be called back at the end of the month to take up school funding again, after the education committee finishes its version of a plan.

Ninety percent of the state's education dollars comes from local property taxes. That setup leads to wide disparities between districts, according to the plaintiffs in Claremont School District v. Governor, a suit brought by five property-poor districts.

"The most likely scenario is that nothing will happen," said Dennis Murphy, a lobbyist for the National Education Association of New Hampshire, the state affiliate of the NEA. "This issue will be carried through the election and be dealt with in the next session."

The Governor's Plan

Gov. Jeanne Shaheen, a Democrat who is seeking a second term this year, proposed a funding formula that would have drawn revenue from taxes on cigarettes and video gambling. Her ABC, or Advancing Better Classrooms, plan called for $123 million in new funds.

The state has no broad-based sales tax or income tax, and Gov. Shaheen pledged to keep it that way when she took office in 1997.

The House in May overwhelmingly passed a compromise that would send $95 million in new money to the poorest districts this coming school year and put the governor's plan into effect in 2000.

But in an advisory opinion issued June 23, requested by state senators, the New Hampshire Supreme Court said that the governor's plan is not constitutional because it would continue to allow varying tax rates.

In their Claremont decision, the state justices ruled that the property tax for education is, in effect, a statewide tax and must be collected at a uniform rate.

While the governor's plan would have set one property-tax rate initially, towns that could raise enough to provide an adequate education with a lower tax rate would have been given "abatements." Towns that could not raise enough would have received additional state aid. Gov. Shaheen's plan, however, would not have required a redistribution of money from property-rich to property-poor towns. The court didn't like that aspect of her plan.

"It should not be forgotten that New Hampshire is not a random collection of isolated cities and towns," the court's opinion said. "The benefits of adequately educated children are shared statewide and are not limited to a particular town or district."

The justices noted that abatements might be allowed if they were "supported by good cause or just reasons." But they said they did not believe the governor's plan met that requirement.

But the governor said she would continue to push her plan forward.

Ms. Shaheen's proposal also includes an effort to raise academic standards statewide. All districts would be required to draft school improvement plans and monitor progress in certain areas each year.

The New Hampshire School Boards Association backs the ABC plan because of its standards component.

"That part of her plan is not being challenged; it's the tax issue," said Paul Khrone, the executive director of the association.

Amendment Proposed

The court also found an alternative funding proposal, sponsored by Sen. Jim Rubens, to be unconstitutional. His plan would have kept in place the existing state finance formula while increasing aid to poorer districts by raising money through a tax increase on hotel and restaurant tabs.

His "A" plan, as he called it, would have allowed "continued reliance upon unreasonable and disproportionate real estate property taxes," the court said.

Mr. Rubens, a Republican candidate for governor, spent this past legislative session trying to drum up support for a constitutional amendment that would, in effect, overrule the supreme court's December ruling and maintain the status quo.

A constitutional amendment requires a 60 percent vote in the House and the Senate and a two-thirds vote in a statewide referendum.

Mr. Murphy of the teachers' union said that the legislature might come up with a small increase in funding this year and that support might exist for a less drastic amendment than Mr. Rubens'.

The question is whether the 15 Republicans in the 24-member Senate can come to an agreement on anything.

But at this point, it's unclear what will happen. According to the court's December decision, the legislature technically has until April of next year to come up with a plan.

And the court reiterated in its advisory opinion last month that the remedy should come from the legislature, not the court.

Andru Volinsky, the lawyer for the five school districts in the finance case, said last week that he's willing to wait and see what happens over the summer.

"Our thought is to give the House and Senate every possible opportunity," he said. "If they are continuing to meet, we want that process to run its course."

Vol. 17, Issue 42, Pages 20, 24

Published in Print: July 8, 1998, as N.H. Lawmakers Go Home With No Funding Plan
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