By GARRY RAYNO, InDepthNH.org
CONCORD — Two education funding decisions released Monday were a double whammy telling lawmakers to significantly increase state funding and the state to stop manipulating the statewide education property tax to benefit wealthy communities.
Rockingham Superior Court Judge David Ruoff set the base cost of an adequate education as no less than $7,356 per pupil, up from $4,100, acknowledging the figure should probably be much higher at around $9,929 per pupil, and that the final decision will be the legislature’s to make.
The new adequacy figure would require the state to increase state aid to public education by $532.6 million. The legislature increased state aid this biennium by $169 million.
“The Court is … cognizant that school funding is a complicated and politically charged issue, with a history that suggests some level of judicial intervention is now necessary,” Ruoff wrote in his decision on the Conval School District case claiming the state is failing to properly fund an adequate education, noting a recent study found the state was funding education at less than half of the recommended level.
“That is one example that calls into question whether the politics of this issue are impeding the State’s constitutional obligations to fully fund the opportunity for children in this state to receive an adequate education. That ends today.”
Ruoff also found the state’s method of administering the statewide education property tax to be unconstitutional as it allows for differing rates when property wealthy communities are allowed to retain excess money raised to meet state adequacy costs, and for the Department of Revenue Administration to set negative tax rates for some districts with no or few students.
Ruoff, in making his decision on the case brought by Steve Rand and other commercial and residential property owners, cited Chief Justice Doe who wrote more than 100 years ago, “A state law selecting a person or class or municipal collection of persons for favors and privileges withheld from others in the same situation . . . is at war with a principle which this court is not authorized to surrender. . . . In the field of taxation, the principle of uniformity and equality of rights is of paramount importance and has been embodied in the ‘proportional and reasonable’ language of Part II, Article 5 of our State Constitution since June 2, 1784.”
Under the decision, the property wealthier communities may no longer retain the excess revenue but must send it to the Department of Revenue Administration beginning with the budget year that begins this fall.
Both decisions are likely to be appealed to the state Supreme Court. And because the two decisions were released at the same time, Ruoff is giving the state an additional 30 days to file reconsideration motions.
Educators and advocates for a fairer education funding system touted the rulings.
Conval Regional School District Superintendent Kimberly Rizzo Saunders, whose district data figured prominently in Ruoff’s decision, was pleased with the ruling.
“Today’s decision reflects what has been apparent for years: that the State of New Hampshire has not lived up to its legal and moral obligation to adequately fund public education,” Saunders said. “The State’s formula places an incredible burden on local communities, and creates inequities that deny all students the best possible education.”
Attorney Andru Volinsky, who was the lead attorney on the original Claremont case and also an attorney on the Rand case, said Ruoff got it right, noting the state essentially conceded the case.
He said the ruling means budget committees need to have the decision in mind when they begin crafting budgets for the next school year this fall.
The state may ask to stay the ruling during an appeal, but Volinsky noted the facts of the case are not in dispute and there is no justification for an appeal because they can’t show they are likely to succeed on the merits.
Educators were also pleased with the rulings.
“Today’s rulings confirm what we have known all along – the state of New Hampshire has failed to adequately fund public education, instead downshifting costs to local communities,” said Megan Tuttle, president of the National Education Association — NH. “While we are encouraged by this recognition of the current inadequate funding scheme, we know this is just one more step in the long process of truly adequately funding public education in our state to ensure all students have the opportunity to succeed.”
But others who seek alternatives to public education support the current funding system blasted the decision.
“The court’s method for determining the cost of an adequate education is absurd,” said Josiah Bartlett Center President Andrew Cline, who is also chair of the State Board of Education. “Trying to figure out the true cost of an adequate education by measuring what monopoly school districts spend is like trying to figure out the true cost of package delivery by measuring Post Office prices before the arrival of FedEx and UPS. The truth is that absent a competitive marketplace for education, no one knows what an adequate education really costs.”
?The Attorney General’s Office’s Director of Communications Michael Garrity said “We have received the court’s order. We will review it and consider potential next steps.”
Ruoff noted in both decisions that under the original Claremont education decision in 1993, the court ruled the state constitution required the state to provide and pay for an adequate education for every child as a fundamental right.
As a fundamental right, the obligation is on the state to prove it meets its obligation, but in both cases the state sought unsuccessfully to shift the burden of proof to the plaintiffs, who did present evidence that current laws and practices are in conflict with the constitutional right to an adequate education, Ruoff ruled.
Instead, Ruoff said, the state tried to discredit the facts and information presented by the plaintiffs without offering evidence to prove them wrong.
Volinsky said there were some real problems with how the state approached this case.
“Its lawyers did not have a lot to work with,” Volinsky said. “But no one should suggest this is a technical victory. This shows the bankruptcy of the state’s position.”
In the Rand case, the plaintiffs argued there are differing property tax rates for the statewide education property tax in violation of the constitution’s “proportional and reasonable”
clause on taxation by allowing property wealthy communities to retain excess money they collected but do not need to cover the cost of an adequate education for their students, or through negative local education property tax rates to offset the statewide levy.
That allows for varying tax rates for a state tax, which is unconstitutional they claimed.
The state argued the rates were not different because allowing the excess money to remain with the community is a spending decision by the legislature.
But Ruoff rejected that contention, citing several past decisions of both the state Supreme and Superior courts.
“Recognizing that tax abatements and exemptions ‘necessarily result in a disproportionate tax burden,’ the Supreme Court explained that such an outcome is permissible under Part II, Article 5 only when abatements are ‘supported by good cause and explanations of just reasons,’” Ruoff writes. “The court concluded that the above-described special abatement would not meet that standard.”
The judge urges lawmakers to act swiftly to remedy the constitutional violation.
“Given the lengthy history of constitutional violations arising out of the State’s various education tax schemes, the plaintiffs urge the Court to act swiftly in curing the above-described constitutional infirmities,” Ruoff writes, noting they first brought their challenge in October 2022.
In his ruling, Ruoff uses much of the cost data generated by Saunders for the Conval school district for areas such as teacher salaries and benefits, class ratios, other services needed for an adequate education such as nurses, materials, building maintenance and transportation, although Ruoff left transportation costs out of his calculation of per pupil costs saying it needs to be dealt with separately but is included in what is needed for an adequate education.
The plaintiffs claimed a deprivation of a fundamental right to an adequate education because the state aid was inadequate and shifts the burden to local property taxes, whose rates vary widely.
However, the state’s position was that the plaintiff’s evidence was fundamentally flawed, the judge noted.
“Relying on that view, the State’s trial strategy was to criticize or otherwise attempt to undermine the plaintiff’s evidence, rather than presenting affirmative evidence defending the sufficiency of the base adequacy aid,” Ruoff writes. “The State presented no evidence to justify the current base adequacy amount.”
The judge said there are three questions presented: what are the components or cost-drivers of a legislatively defined adequate education, and what is not included; what funding is necessary for school districts to provide those components, and how does that compare to the state aid currently provided.
Ruoff went through a list of those components based on Saunders data and other studies to determine that teaching personnel costs including salaries and benefits amount to $3,981 per student; non-teacher employee costs, $901; materials, technology and professional development, $430;
facilities, $1,000; transportation, $750, and nurses, $294, totaling $7,356, which is $3,000 more per pupil than current adequacy aid of $4,100.
“As emphasized above, this $7,356 threshold figure is the product of conservative calculations designed to overcorrect for any conflicts or ambiguities in the evidence, as well as any unresolved policy determinations,” Ruoff writes.
He notes the figure is probably low and he considered per pupil cost to be about $9,900 at the end of the trial earlier this fall, which is remarkably close to the figure determined by the consultant to the Education Funding Commission which met four years ago.
“The Court recognizes the significant implications of this Order, and the potential for political strain,” he writes. “However, the Court cannot ignore the substantial evidence put forth by the plaintiffs: evidence that amply demonstrates the inadequacy of the existing base adequacy aid figure,”
Ruoff also granted the plaintiffs attorneys’ fees.
There are still several outstanding issues in the Rand case that are not addressed in either ruling the attorneys would like addressed in a trial.
Many groups and organizations were pleased with rulings including Democrats in the House and Senate, as well as educators and the NH School Fair Funding Project
“These decisions are big wins for New Hampshire students and taxpayers. The State has abdicated its constitutional responsibility to fund education for too long, and these rulings, just ahead of the upcoming legislative session, send a powerful signal that the State needs to get to work bringing school funding in line with 30 years of legal precedent,” said Zack Sheehan, NHSFFP Executive Director. “No more excuses and delays.”
Senate Minority Leader Donna Soucy, D-Manchester, said Democrats have always led the way on advocating for education funding that meets the needs of public schools.
“Quality, accessible education is the bedrock of our state,” she said. “Access to education not only sets children up for success, but also ensures that the future of our state remains bright and economically competitive.”
House Minority Leader Matt Wilhelm, D-Manchester, echoed Soucy’s remarks.
“Today’s rulings provide an opportunity for the state to revisit education funding and assure that public schools are fully funded in a fair way that does not overburden property taxpayers,” Wilhelm said. “At a time when public education is under constant political attack, the importance of investing in our kids and our state’s future has never been more urgent.”
Not everyone agreed with the rulings.
“This is not a fair solution,” said Mark Decoteau, Chair of the Coalition Communities 2.0. “To have a Court ruling say that the State of New Hampshire can legally take revenue from a community raised by taxpayers in that city or town and give it to another city or town without any accountability is just plain wrong. This order is a ‘back to future’ ruling that creates winners and losers with failed funding structure that has been rejected by the NH Legislature.”
The Coalition Communities 2.0 is an organization of mainly property wealthy communities concerned about any new funding proposal that would do away with their ability to retain any excess SWEPT revenues. The group was an intervenor in the Rand case.
Decoteau said “The unfair redistribution of property tax revenue being raised in one town and expended in another has been tried in the past and it was an utter failure in terms of fairness and fiscal responsibility. The State needs a new education formula that has a structure or guardrails so the State and its communities.”
Garry Rayno may be reached at email@example.com.