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NH lawmakers have another education funding plan to consider

By Garry Rayno - InDepthNH | May 31, 2023

Garry Rayno

Last week, the third overhaul of the state’s education funding formula was unveiled before the Senate Finance Committee, which decided to include it in the Senate’s proposed state budget for the next two years.

Gov. Chris Sununu unveiled his plan in his February budget address, the House reworked the plan in its proposed budget and now it’s the Senate’s turn.

All three plans added more than $100 million to the total state aid for schools, with Sununu’s plan adding $129.2 million, the House $157.4 million and the Senate $156.9 million, but an amendment expected this Tuesday would add $11.5 million to the Senate, totaling $168.4 million.

The state’s total education aid for public schools would be $1.045 billion for the Senate, the House $1.031 billion, and Sununu’s $1.017 billion in the first year of the biennium, and in the second year, the Senate’s $1.047 billion, the House $1.051 billion and the governor’s $1.027.

The figures include $363 million collected under the statewide education property tax each fiscal year.

Those are the raw numbers and it appears as though every step along the way lawmakers are committing to a major increase in state education aid.

However, the total cost of public education for the 2022-2023 school year was $3.55 billion, which means state aid accounts for less than one-third of the cost of public education.

The Department of Education’s latest average per pupil cost for the 2021-2022 school year is about $23,000 when the base adequacy grants in the three proposals this year range from a high of $4,700 for the governor’s plan and a low of $4,000 in the House plan for the first year. The Senate per-pupil base adequacy grant is $4,100.

Looking at those figures which also include federal financial aid, indicates the state pays less than 25 percent of the total cost of public education grades Kindergarten to 12th grade.

After the state and federal aid, local property taxes have to pay the rest of the considerable burden.

The state’s education aid program uses two components to determine what each community receives.

One is enrollment and the other is need which means help for school districts or communities with low property values compared to the state average and high poverty levels.

Another way to look at the districts that need the most help is to determine the per pupil property value of the community versus the number of students in its school system, which indicates how difficult it would be to raise additional money for education through property taxes.

In the property wealthy districts, the figure is very high, while it is very low in poorer districts.

For example Berlin has $780,708 of property value per student while the state average is $1.6 million and some communities like New Castle has $19.8 million per student and Moultonborough has $10.6 million.

The disparity between the top and the bottom has grown since the Claremont education opinion from the state Supreme Court more than 20 years ago.

Yet all three of the plans spend more than half of the state aid money on base adequacy grants, or on a district’s enrollment. That benefits fast growing schools like those along the New Hampshire border with Massachusetts and around lakes and other desirable places to live in New Hampshire and the larger cities like Manchester, Nashua and Concord. But with so much money going to all school districts at the same rate, there are less funds to help school districts losing population like Berlin, Claremont, Franklin, Laconia, and other economically challenged areas with high property taxes.

The money to help those communities is called differential aid which is the other component of state aid.

The number of students on free and reduced lunches is used to determine a school district’s poverty level in the education formula, along with the number of special education students who cost more to educate than other students, and students whose first language is not English.

All three plans increased the per pupil grants for those three categories, as well.

In the first year of the Senate plan, the basic adequacy grants account for $643 million of the total state aid of $1.034 billion, leaving $391 million for targeted aid.

To put that in perspective, $391 million is 1.4 percent of the total spent on public education.

That is why many of the neediest communities do not make great gains under any of the plans proposed this year although the amount of money is significant compared to what was done in year’s past.

But the end result is a community like Berlin, which received $11.1 million in state aid this school year, would receive $11.3 million under the Senate plan and $12.1 million under the House’s version.

Claremont, the community that successfully sued the state over its education funding system, currently receives $15.1 million in state aid, and would receive $15.4 million under the Senate plan and $17.1 million under the House’s.

Another Claremont lawsuit community, Franklin received $9.7 million this school year, $9.8 million under the Senate and $10.8 million with the House’s.

Newport currently receives $8.1 million in state aid, and $8.2 million from the Senate and $8.9 million under the House.

In 14 communities researched, only Manchester and Nashua would receive more money under the Senate plan

Manchester currently receives $82.2 million, $96 million from the House and $110 million from the Senate.

Nashua currently receives $57.3 million, $64.1 million from the House and $69.4 million from the Senate.

Other cities do better under the House plan, like Rochester which currently receives $28.9 million, would get $32 million under the House plan and $29.5 million under the Senate.

No community is going to turn down the additional money, but by weighting the formula toward enrollment, the additional dollars do not make a significant impact on the school districts that need the most help, or specifically on their property tax rates.

The disparity aid program the legislature approved in the 2019-2020 budget did lower property taxes for the most needy communities because it included both poverty and property value in its equation.

The money did not go to all the communities in the state, just the most needy.

The consultants advising the Education Funding Commission a couple of years ago noted the state spends enough money on public education, but the money is not distributed in a way to help the poorest communities provide an adequate education to their students compared to the ones with high property values that can give their students much more through their education system.

They suggested a much higher statewide property tax to better equalize the system for students and taxpayers.

But those who went through the first few years of the first education funding plan after the Claremont decisions, know a statewide property tax above $8 per $1,000 of equalized valuation led to screams and howls from the donor towns and the rate was reduced and eventually in 2011 donor towns were allowed to keep the excess money they raised above what they needed to cover the adequacy grants for their students.

If New Hampshire is really serious about helping the needy school districts and utterly opposed to a statewide property tax, lawmakers will have to find a very large pot of money somewhere else to make a real difference for the cities and towns that need the most help.

The three formulas proposed this year are only playing around the edges and are not likely to settle either of the two lawsuits pending against the state’s education funding system.

Settling the two suits is going to take a lot of money lawmakers will not want to approve fearing the political consequences.

Garry Rayno may be reached at garry.rayno@yahoo.com.

Distant Dome by veteran journalist Garry Rayno explores a broader perspective on the State House and state happenings for InDepthNH.org. Over his three-decade career, Rayno covered the NH State House for the New Hampshire Union Leader and Foster’s Daily Democrat. During his career, his coverage spanned the news spectrum, from local planning, school and select boards, to national issues such as electric industry deregulation and Presidential primaries. Rayno lives with his wife Carolyn in New London.


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