Panel calls for school funding overhaul
By ETHAN DeWITT and EILEEN O’GRADY
CONCORD — The story of New Hampshire’s education funding system has for decades been a tale of two types of towns — the “property-rich” towns, with wealthy tax bases and high property values that can generously fund their public schools, and the “property-poor” towns who struggle to provide even basic funding without a deep tax base.
Property-rich towns typically have better facilities, higher teacher pay, and in many cases, better educational outcomes while everyone’s taxes remain relatively low. In the property-poor towns, facility upgrades languish, staff turnover is more rapid, and property taxes are disproportionately high. Despite multiple state Supreme Court rulings ordering it to be fixed and three statewide commissions to recommend a way out, the divide perpetuates.
A new report released this week by the Commission to Study School Funding has declared New Hampshire’s system to be “inequitable from both student and taxpayer perspectives,” and commission members are hoping to fix the problem once and for all through policy changes.
“For New Hampshire to meet its constitutional responsibilities where all students have an equal opportunity to an adequate education, its state aid distribution formula needs to be altered,” state Sen. Jay Kahn, a member of the commission said in a press conference Tuesday.
In the 181-page report, which was approved Monday, the commission is recommending a shift in how New Hampshire redistributes some of its property taxes, hoping to help iron out the dispar-
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ities between towns with richer and poorer tax bases.
Currently, the state collects the Statewide Education Property Tax (SWEPT) — in addition to local property taxes — from homeowners. Most state aid is allocated to schools as a flat, universal cost per student. Any excess collected that isn’t needed by the local school district is returned to towns by the state.
That means property-rich towns often don’t use up all of the state property taxes they pay for their schools, and receive large amounts back. Property-poor towns, on the other hand, need all the property tax revenue they can get, and frequently have to raise taxes even higher — or make painful cuts to staff and services — to compensate.
“With respect to fiscal policy, the commission found that New Hampshire’s current system of funding fails to direct aid to more needy communities in a meaningful manner, and inequities manifest themselves in more needy districts through lower student outcomes and higher property tax burdens,” the report states.
The commission proposes redistributing the SWEPT property taxes so that excess taxes from wealthier towns are passed along to those with fewer resources, restoring a “donor town” system that had been eliminated in 2011.
In devising its recommendations, the committee met regularly for 10 months. Its membership includes state senators and representatives, school administrators and education specialists. It developed partnerships with the University of New Hampshire Carsey School of Public Policy and the American Institutes for Research, which analyzed funding and taxation models for the group.
It’s been 35 years since an outside group has examined school funding data that has been submitted to the Department of Education, according to commission member and state Rep. Mel Myler.
The committee had $500,000 at its disposal to farm out data analysis.
“Using 10 years of Department of Education data, we were able to demonstrate and explain what the harm is to districts who spend less and have students with various needs that don’t get met at the same level as they do in other districts,” Kahn said.
Aside from the SWEPT reforms, the commission also advocates for across-theboard increases in state aid to school districts. That includes an increase in “adequacy grants” for underfunded school districts as well as direct property tax relief efforts for town residents.
Kahn said the commission plans to introduce the policy in the next legislative session, with the goal of getting changes implemented by fiscal year 2023.
It is not clear how much bipartisan support the recommendations will have in the Legislature. Rep. Rick Ladd is the only Republican lawmaker on the commission and voted against the recommendations. But some commission members said providing tax relief while producing better educational outcomes should be universally appealing.
“When we began to look at this policy in the Legislature, there was no opposition to this kind of study, because there was a recognition we had to have this look,” Myler said. “I think as we look at the combination of a new approach to look at this, and also looking at property tax relief, I think there is going to be a universal need to look at this in a more serious way than we have in the past.”