N.H. Lawmakers Still Seeking School Finance Solution

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The upcoming session of the New Hampshire legislature should reveal whether the just-concluded November elections will change the state's response to the challenge of financing public education.

Nearly a year after New Hampshire's highest court declared the school funding system unconstitutional, the legislature has yet to come up with a plan to revamp it.

Some observers are hopeful the elections may have changed the balance of views enough to break a political and policy stalemate over the terms of any solution. Last year, the high court ordered the legislature not only to produce a new plan for financing schools, but also to carry it out, by April 1, 1999.

"The political winds have changed. We have a new state Senate," said Paul W. Krohne, the executive director of the New Hampshire School Boards Association. "We're interested in the '99 session being given this chance to come up with an acceptable solution despite the fact that the '98 session had the same chance and blew it."

Soon after the Nov. 3 elections, plaintiffs and defendants in Claremont School District v. Governor refocused attention on the school funding case by filing new requests with the state supreme court.

New Court Action

On Nov. 9, Gov. Jeanne Shaheen, the Democrat who was re-elected this month to another two-year term, asked the court to extend by two years the deadline for the legislature to fix the problem.

The governor wants the extension, said Judy E. Reardon, the legal counsel for the governor's office, so a question on public financing of education can be put before voters during the presidential primaries in 2000. Critics say Ms. Shaheen just wants more time to push through a constitutional amendment that would keep the current funding system in place. A hearing on the extension request was scheduled for this week.

Meanwhile, on Nov. 10, the school district plaintiffs asked the court to enact a plan to place state funding in receivership, essentially allowing the court to take money from the state treasury and give it to the schools if the legislature isn't able to meet its April 1 deadline.

"We think the receiver has to be up in place and running by July 1, 1999," said Andru H. Volinsky, a lawyer for the five districts that sued the state for failing to provide an "adequate education" for all children as guaranteed in the state constitution.

In New Hampshire, the education finance conflict stems from the fact that 90 percent of the money that goes to public schools comes from local property taxes. The state supreme court ruled the finance system unconstitutional last December, saying variations in local property-tax rates led to inequitably funded districts.

State Taxes?

But while most state lawmakers agree that the state should take on the responsibility of paying for schools, they disagree on how to do it. This year, lawmakers proposed about a dozen plans for new taxes to pay for education, ranging from combinations of income and property taxes to taxes on capital gains and dividends. A proposed constitutional amendment, which would have kept the current local property-tax system but required the state to come up with money to remedy inequities in school funding, was defeated just before the legislature adjourned in September.

"The state in effect has a financial obligation--estimated between $800 million and $1 billion dollars--to pay for education," said Sen. James W. Squires, a Republican who was just re-elected and who has served on two commissions charged with estimating the cost of an adequate education. If the state takes on that obligation, it will need to double its overall spending, he argued. (New Hampshire's fiscal 1999 budget is $966.5 million.) "The question is, 'From whence comes the money?'" added Mr. Squires, who believes it should be generated by a mix of new and existing taxes.

The legislature, which starts its next session Jan. 6, typically meets for five months each year, although this year it met for nine, mostly because of school finance.

While Republicans controlled the Senate in 1998, thanks to the recent elections, Democrats will have a majority--13 to 11--in 1999, which could change the atmosphere for school finance discussions, Mr. Krohne said. The newly elected House will continue to have a Republican majority, as it did this year.

Two Democrats--Mark Fernald, a lawyer, and Clifton Below, a state representative--were just elected to the state Senate on platforms that promoted passing new taxes to pay for education--a bold move in a state with no income tax.

Gov. Shaheen, on the other hand, believes new taxes aren't necessary. "One of the things the governor is open to is allowing limited video gambling" to raise education funds, Ms. Reardon said. The state currently has a lottery and four racetracks, but no casinos, she said.

Vol. 18, Issue 13, Pages 14-15

Published in Print: November 25, 1998, as N.H. Lawmakers Still Seeking School Finance Solution
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