Opportunity for All: Politics, money and the state’s education funding conundrum

Monitor staff
Published: 8/6/2020 3:18:38 PM

Editor’s note: This is the second in an occasional examination of the effort to restructure the state’s approach to education funding.

The 17-member Commission to Study School Funding is more than halfway through its effort to reform the way New Hampshire pays for its public schools, a debate about money and property taxes that has festered in the courts, and the Legislature, for more than 25 years.

Since January, the members have slogged through charts, graphs, spreadsheets, briefing papers, reports and court decisions, and heard hours of testimony from school administrators, state officials, lawyers and tax policy experts. For the first time since this decades-long search for resolution began, a high-powered national team of experts has been hired to analyze data and identify disparities in student performance around the state. Their findings will be presented to the Commission on Monday.

Last week, when commission members gathered by teleconference – as is their pandemic-era routine – to assess where they stood, they were asked why they thought so many other efforts to solve the school-funding crisis have not worked. The core issue was clear, as it has been since the state Supreme Court declared in 1993 that the state has a constitutional obligation to pay for an “adequate” education for all students, no matter where they live. In New Hampshire, where more than 70% of school costs come from local property taxes, the issue has deepened the divide between property-rich and property-poor towns. How do you narrow the gap?

“To me, it’s all about the money,” said former state senator Iris Estabrook, an educator from Durham who co-chaired a 2008 joint legislative committee on the cost of adequacy. The formula that committee adopted 12 years ago, still in use today, has been declared unconstitutional in the latest round of school litigation, known as the ConVal case, brought by four school districts in rural New Hampshire and backed by another 26 districts. The state’s challenge to that decision will be heard by the Supreme Court on Sept. 24.

“All of the changes that have been made were not made for education policy reasons, they weren’t made to improve anything, they were made to save money,” Estabrook told her colleagues. “It’s totally political and it’s totally political about the spending of money and the raising of money.” She said she didn’t know how the commission would get around the “general” unwillingness” to raise overall spending on education, and “the general unwillingness to reduce spending in my particular district” so it can be used somewhere else in the state with fewer resources.

“That’s the essence of why things haven’t worked,” she said with characteristic bluntness. “It’s not because we haven’t understood the problem.”

Without any broad-based source of revenue such as an income or sales tax, New Hampshire ranks first in the nation for reliance on property taxes for local and state revenue. Local property taxpayers cover 73% of school costs in their districts – 62% from local education property taxes and another 11% through the Statewide Education Property Tax (SWEPT).

The statewide property tax revenue is assessed locally but never gets to Concord – although it is considered, for accounting purposes, a “state” tax. Instead, it is counted against what the state would owe the locality to pay for an adequate education, which it says costs $3,709 per pupil, according to the current formula. With extra “differentiated” aid for special education and low-income students for example, the average per-pupil adequacy grant is $4,502. The state Department of Education estimates the average cost per pupil is $16,000, not counting buildings and transportation. Local property-tax payers make up that gap.

If a property-rich community raises more than it needs through SWEPT to cover the per-pupil adequacy grant, it gets to keep the surplus.

That heavy dependence on local property taxes for school financing under the current formula results in stark differences in the property-tax burden among cities and towns. Lawyers and advocates for school districts have argued that the 2008 formula for the cost of an “adequate education” grossly underestimates the true cost of an adequate education even by the state’s own definition.

The commission – seven current lawmakers and a former state senator, veteran school superintendents, a prominent tax lawyer, a former state revenue commissioner, the president of a manufacturing company and a community college leader – was established by the Legislature last year and given a $500,000 budget. The Carsey Institute for Public Policy at UNH was hired to manage the project logistics. The key factor in the commission’s ultimate recommendations will be the analysis conducted by the Washington, D.C.-based American Institutes for Research (AIR), which has examined school funding mechanisms in 14 other states. The project will also include the first public opinion poll on education funding taken since 2002.

Commissioners say they are convinced that, overall, the public supports reducing the inequities in school funding from place to place, and lessening the burden on local taxpayers – after all, no significant objections were raised to spending a half-million dollars in taxpayer money to tackle the issue again through an independent commission. But the bottom line is what happens in the State House, where the decisions are made about spending.

For state Rep. Mary Heath of Manchester, “politics get in the way.”

“We continue to see again and again no one is willing to talk about different forms of revenue,” said Heath, a member of the House Finance Committee, at last week’s commission meeting. “We get stuck every single election. I worry right now about our conversations and somebody taking the conversation and saying, ‘Oh that school funding commission just wants to raise taxes,’ and it becomes a political football.

“We seem to be stuck in this world of inability to consider something different,” she said.

For Corinne Cascadden, the former school superintended in Berlin who made regular trips to Concord last year to lobby for more school funding, the political climate is the “most intractable” issue. To sustain the state’s economy, the state needs to put more money into education, she told her fellow commissioners.

“You have to invest money to reap a benefit, and if the state wants to keep its kids here, they need to spend some money on it,” Cascadden said.

The formula used to calculate the cost of an adequate education is at the heart of the ConVal school-funding lawsuit. Those school districts contend that the current base adequacy figure, $3,709 per pupil, doesn’t come close to the cost of an adequate education in their areas, which they calculate at $9,929. At the commission’s request, the Department of Education recently calculated the based adequacy grant at $4,337. Advocates for school funding reform in 2019 tried to get the Legislature to go halfway, and suggested $7,500 as an interim step: average per pupil annual spending then was about $15,000.

In a preview of AIR’s analysis of New Hampshire school data, senior analyst Drew Atchison told the commission last week that each school district has been examined to identify disparities in educational outcomes, using measures such as student performance, attendance, graduation rates and demographics, such as family income – evidence-based research used in other states. Tax equity statewide, and how existing revenue for education is distributed, has also been examined. Models will be presented on revenue and “how it can be raised to make the costs we come up with,” Atchison told the commission.

The goal, he said, is to figure out “how much does it cost for each district in the state, given their demographic characteristics, to achieve a common level of outcome.”

The objective is to close the “opportunity” gap.

To commission member William Ardinger, a Concord tax lawyer who graduated from Stevens High School in Claremont, New Hampshire has an “unfair distribution” problem with state aid to public schools. Ardinger, who was appointed to the commission by Gov. Chris Sununu, has pointed to the Massachusetts school funding formula as a possible alternative to consider. Next month, the full commission expects to meet with Massachusetts state Rep. Alice Peisch, the chair of that state’s Joint House and Senate Committee on Education.

“There is nothing good about our current formula,” Ardinger told the fellow commissioners last week. “If we don’t get a formula that drives more money to Manchester, something’s wrong,” he said.

In Massachusetts, the state determines an adequate education spending level for each school district using a system of “weights” for types of students – similar to AIR’s research in New Hampshire – called a targeted local contribution. Using factors such as residents’ income and property value, the state then calculates how much of that contribution can be covered with local property taxes. State aid fills in the gap.

Attitudes about whether one community should share tax wealth with needier communities – and New Hampshire’s religious adherence to local control – has been an undercurrent throughout New Hampshire’s school funding crisis. An ill-named effort years ago to establish “donor towns” was done away with. Commissioners said last week they believed it was time for a change in attitude.

“Getting people to start thinking about themselves as citizens of the state as opposed to citizens of a community is going to be a tough thing,” said Val Zanchuk, the president of Graphicast, a Jaffrey manufacturing company and a past president of the state’s Business and Industry Association.

“You end up with politically viable solutions that don’t solve the educational problem,” he said.

A record of the commission’s work and access to meetings via teleconference, is available at carsey.unh.edu/school funding.

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