NH School Funding Adequacy: Amici Brief, Goals, Themes & Constitutional Principles
Dive into NH school funding challenges through an amici brief presented by 25 districts in the ConVal case. Explore goals, themes, and core constitutional principles driving NH Supreme Court decisions, highlighting inequities and urging legislative action for an urgent problem.
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COMMISSION ON SCHOOL FUNDING ADEQUACY AND FISCAL POLICY WORK GROUPS JUNE 1, 2020 The Brief of 25 Amici School Districts in the ConVal Case: Applying NH Constitutional Principles to Current Property Tax Rates and Adequacy Grants Presenter: Attorney John Tobin (jtobinjr@comcast.net) Co-counsel: Attorney Natalie Laflamme
The 25 Participating Districts Large: Manchester, Nashua, Derry, Concord, Keene Five Regional School Districts: Mascoma Valley, Merrimack Valley, Winnisquam, White Mountains, Governor Wentworth Former Mill Towns: Berlin, Claremont, Newport, Pittsfield Mid-Size/Small Rural Districts: Hopkinton, Haverhill, Warren, Piermont, Bath, Chesterfield, Harrisville, Marlborough, Marlow, Nelson, Westmoreland Together, these Districts serve more than 30% of NH s public school students. 2
Goals of the Amici Brief Educate the NH Supreme Court about how the current system works and its inherent unfairness Show that this problem harms students, taxpayers and school districts across the state Demonstrate that the system s inequities have worsened in the past decade Convince the Court that the problem is urgent and that sending the case back to the Superior Court to address procedural issues will serve no purpose 3
Themes of This Presentation I. Constitutional Principles Guardrails and Opportunities for the Commission II. The Amici Brief s Argument Adequacy: The Big Contradiction Between the State s Definition and Its Funding Formula A. Tax (and Spending) Inequity: Widespread and Growing B. The Supreme Court Should Set a Deadline for the Legislature to Act. C. 4
The Two Provisions of the NH Constitution at the Core of the NH Supreme Court Decisions in the Claremont Cases The State has a duty to pay for the cost of a constitutionally adequate educationfor every K-12 public school student. Claremont v. Governor (Claremont I, 1993), citing NH Constitution, Part 2, Article 83 The taxes that the State uses to pay for this education must have a uniform rateacross the state. Claremont v. Governor (Claremont II, 1997) citing NH Constitution, Part 2, Article 5 5
The States Four School Funding Duties Throughout the past three decades, the Supreme Court has identified four core obligations that the Legislature and the State must meet: Define an adequate education; Determine its cost; Fund it with constitutional taxes; and Ensure its delivery through accountability. Londonderry Sch. Dist. v. State,154 N.H. 153, 155-56 (2006) 6
The Scope of Adequacy: Expansive and Future-Oriented Mere competence in the basics reading, writing, and arithmetic is insufficient in the waning days of the twentieth century to insure that this State's public school students are fully integrated into the world around them. A broad exposure to the social, economic, scientific, technological, and political realities of today s society is essential for our students to compete, contribute, and flourish in the twenty-first century. Claremont II, 142 N.H at 474. 7
Adequacy is a Dynamic Concept and It is Intended to Protect and Serve All of NH s Students A constitutionally adequate public education is not a static concept removed from the demands of an evolving world. It is not the needs of the few but the critical requirements of the many that it must address. Claremont II, 142 N.H at 474 8
The Resources Needed to Achieve Adequacy May Differ from District to District We emphasize that the fundamental right at issue is the right to a State funded constitutional adequate education. It is not the right to horizontal resource replication from school to school and district to district. Claremont II, 142 N.H. at 473-474 9
The Connection Between Defining and Funding an Adequate Education Any definition of constitutional adequacy crafted by the political branches must be sufficiently clear to permit common understanding and allow for an objective determination of costs. Whatever the State identifies as comprising constitutional adequacy it must pay for. None of that financial obligation can be shifted to local school districts, regardless of their relative wealth or need. Londonderry School District v. State 154 N.H. at 162 (2006) 10
Challenging the Current Adequacy Standard KEY POINTS The adequacy formula is completely incongruent with and contradictory to the Court s decisions and the State s own expansive statutory definition of constitutional adequacy, including key portions of the State s Minimum Standards. Because the State pays for less than one-third of the actual cost of K-12 public education, it is nonsensical for the State to assert that it covers the true cost of adequacy. How can we really provide adequacy with only 1/3 of our current teachers, buildings, computers, etc.? Even if we don t know exactly how much constitutional adequacy costs, it must be far more than $3,709 per pupil. 11
School Tax Rates That Vary Greatly from Town to Town Are Unconstitutional There is nothing fair or just about taxing a home or other real estate in one town at four times the rate that similar property is taxed in another town to fulfill the same purpose of meeting the State s educational duty. Compelling taxpayers from property-poor districts to pay higher rate and thereby contribute disproportionate sums to fund education is unreasonable. Claremont v. Governor (1997) (Claremont II) 12
Regardless of the Educational Role of Local School Districts, the State Must Fund Schools with Taxes at Uniform Rates While the State may delegate its obligation to provide a constitutionally adequate public education to local school districts, it may not do so in a form underscored by unreasonable and inequitable tax burdens. Claremont II, 142 N.H. at 476 13
The Legislature Has Great Discretion about How to Raise Revenue Decisions concerning the raising and disposition of public revenues are particularly a legislative function and the legislature has wide latitude in choosing the means by which public education is to be supported The legislature has numerous sources of expertise upon which it can draw in addressing educational financing and adequacy, including the experience of other States that have faced and resolved similar issues. Claremont II, 142 N.H. at 476 14
The Constitutional Standard for Using Property Taxes for School Funding To the extent that the property tax is used in the future to fund the provision of an adequate education, the tax must be administered in a manner that is equal in valuation and uniform in rate throughout the State. Claremont II, 142 N.H. at 471 15
Focusing on Disproportionate and Inequitable Property Tax Rates KEY POINTS As the result of the insufficiency of state funding, local school districts must make up the gap between what the State requires and what it pays for. Because property wealth among school districts varies so greatly, the taxes that districts must impose to make up the State s shortfall are levied at highly unequal rates. These nominally local education taxes are in reality state taxes used to meet the State s duty. The unequal rates violate the NH Constitution and the Supreme Court s rulings in the Claremont cases, which require that taxes assessed to meet the State s educational duties must be assessed at uniform rates. 16
2018-19 Revenue of NH School Districts 2018/19 Revenue of NH School Districts: 3.29 Billion $3.29 billion Tuition, Food & Other, 1.6% Local Property Tax, 62.1% Federal Aid, 5.1% Other State Aid, 2.9% State Cash Adequacy Aid, 17.0% Not including sale of bonds and notes Statewide Property Tax (SWEPT), 11.2% 17
Change in School District Revenue, 2008 - 2018 $700,000,000 $570,434,605 $600,000,000 $500,000,000 $400,000,000 $300,000,000 $200,000,000 $100,000,000 $34,362,668 $32,679,121 $354,681 $- $(20,225,961) $(100,000,000) Local Taxation State Federal Sources Tuition, Food, & Other Local Revenue Other State Sources "Adequacy" Aid 18
Equalized Property Value Per Pupil, Equalized Property Value per Pupil 2018/19 2018-19 $8,000,000 $7,000,000 Red line is state average $1,118,065 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 19
Change in Equalized Property Value, 2007 - 2017 50% 40% 30% 20% 10% 0% -10% -20% -30% 20
Tax Rates and Spending Per Pupil, 2018- 2019 Local Education Tax Rate Equalized SWEPT Rate Total Education Tax Rate Spending Per Pupil Town Portsmouth $4.50 $1.98 $6.48 $18,685 Moultonborough $1.83 $1.96 $3.79 $25,687 Derry $14.13 $1.87 $16.00 $15,336 Hopkinton $18.76 $1.97 $20.73 $17,175 Berlin $15.71 $1.71 $17.42 $16,779 21
Hanover and Some of Its Neighbors Education Tax for $250,000 Home $2,776 $5,488 $6,032 $6,020 $4,468 $3,472 $4,265 $3,465 Elementary School Spending Per Pupil $22,484 $19,933 $18,426 $16,917 $17,654 $25,575 $23,185 $19,999 Spending Gap Per 20 Students Equalized Value per Pupil Educatio n Tax Rate District Hanover Canaan Charlestown Claremont Keene Lebanon Lyme Marlow $2,112,981 $804,665 $457,067 $422,632 $740,885 $1,726,217 $1,292,344 $905,841 $11.11 $21.95 $24.13 $24.08 $17.87 $13.89 $17.06 $13.86 -$51,020 -$81,160 -$111,340 -$96,600 +$61,820 +$14,020 -$49,700 22
School Tax Rate Variations within Timberlane Regional School District (based on 2017-2018 Equalized Tax Rates) Equalized Value Per Pupil Equalized Education Tax Rate Tax on $200,000 Home Atkinson $1,350,548 $13.70 $2,740 Danville $696,084 $20.46 $4,092 Plaistow $1,101,747 $15.01 $3,002 Sandown $692,687 $18.76 $3,752 23
77% of Children Attend School in Communities with Below Average Equalized Property Values 2018 Equalized Property Value per Pupil (ADM/R) for 237 Towns $6,000,000 $5,500,000 23% of students attend school in 104 towns with above average tax base. $5,000,000 $4,500,000 $4,000,000 $3,500,000 77% of students attend school in 133 towns with below average tax base. $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 One dot for each of 227 towns, sorted from low to high (10 towns above $6 million are off the top of the chart) 24
The Court, Commission, and Legislature The Legislature is the audience and then the decision-maker The Court provides binding direction on Constitutional parameters (by January 1, 2021?) The Commission provides policy choices, based on research, expertise, and public input (by January 1, 2021) July 1, 2021 is a reasonable deadline for legislative action 25
QUESTIONS ? 26
Property Taxes and Other Largest NH Taxes in 2018 ($ in millions) $4,000 State School $3,500 $363 $288 County $3,000 Municipal $2,500 $1,102 $2,000 Local School $1,500 $1,000 $1,935 $298 $500 $482 $332 $212 $149 $115 $0 Property taxes Business taxes Meals and rooms Tobacco Real estate transfer Insurance
