By ANDRU VOLINSKY
From ‘A Book, an Idea and a Goat,’ Andru Volinsky’s weekly newsletter on Substack is primarily devoted to writing about the national movement for fair school funding and other means of effecting social change. Here’s the link: https://substack.com/@andruvolinsky?utm_source=profile-page
Three briefs have now been filed in the Rand NH Supreme Court appeal urging the court to overturn Judge Ruoff’s finding that the Statewide Education Property Tax (SWEPT) is unconstitutional. Our response is due in about a month.
Judge Ruoff found the SWEPT unconstitutional because it is administered in a fashion that gives taxpayers in the wealthiest towns an illegal preference that allows them to either pay the property tax at a lower effective rate than others or to be excused from paying the state’s education tax at all. I discussed the intervenor’s arguments two weeks ago.
Jason Sorens, the leader of the Free State Movement, filed a “friend of the court” or amicus brief on behalf of the American Institute of Economic Research (AIER), a Koch Network funded enterprise. The Free State Movement wants to convince 20,000 Libertarians to move to NH to take over state and local government. They’ve brought us PorcFest, Robert F. Kennedy, Jr. and a stealth effort to strip little Croydon, NH of half its school funds. Free Staters often run as “regular” Dems and Republicans, hiding their true intentions and allegiances. So, good reason to be suspect of this brief.
In a self-righteous tone, Sorens’ brief declares that “that judicial decision-making in school finance cases across the country has to date been remarkably bereft of economic reasoning and evidence…” I think Professor Sorens would benefit from a little George Santayana, who wrote “Those who cannot remember the past are condemned to repeat it.”
The Claremont trial, as an example, was replete with economists. Leslie Ludtke and Pat Donovan called four of them as witnesses. Although Judge Manias, the trial judge, bought what they were selling, the NH Supreme Court rightly rejected their claims.
Three of the state’s economists presented the economics theory of “capitalization” to justify a system with low taxes in wealthy districts and oppressively high taxes in poor ones. Sorens recycles the same theory in his brief. The three economists weren’t light weights: two taught at Dartmouth and one at Harvard. Their application of capitalization theory, like Sorens’, would have flunked Econ 101.
Under capitalization theory, the more an investor commits to a particular investment, the bigger his return should be as the true value of capital is its earning capacity.
A simple example of capitalization theory might be two investors buying $100,000 worth of bonds. The first investor puts down $10,000 and the second commits $30,000 towards the purchase of their bonds. Under capitalization theory, the second investor shouldn’t invest his $30,000 in the bonds unless he has a better rate of return because more of his capital is at risk. There is nothing about this theory that discriminates against the first investor based on socio-economic class or race as is often the case with public school finance. The second investor simply committed more cash at the outset to buy the bonds and should hold out for higher quality bonds with a better rate of return.
The problem with this economics analysis in the school funding context is that the homes in both the wealthy and the poor districts aren’t the same. It’s not that the homeowner in the wealthy district paid more for the same house and therefore deserves a better payoff in the form of a lower tax rate. The homeowner in the wealthy district paid more because the expensive house they bought is likely larger, in a more desirable location and has better services, including schools. The house was more expensive to buy because the buyer got more house.
Dartmouth Professor William Fischel tried to make his trial presentation homier by sharing that he had bicycled through all the plaintiff (poor) districts and all the comparison (wealthy) districts. He claimed he knew them well because of his bike rides. This testimony gave me the opportunity to ask Fischel the question that put his take on capitalization theory to shame. I asked if during his bike tour he noticed that Rye had an ocean and Allenstown did not? I also asked him if he knew how many of the residents in Allenstown’s plentiful manufactured homes had the money to buy mansions on Ocean Boulevard in Rye.
Caroline Hoxby, the Harvard professor, who was paid more than $10,000 by the state for her testimony, had two contributions that should go down in the annals of things Harvard economists should not say while on the stand. (She’s now at Stanford.) First, when questioned about the fact that she had only recently earned her PhD, Hoxby testified that she was actually at the most productive age for economists. This left us all to wonder about the state’s other economists—all much older–who Hoxby must have considered well past their “sell by” date.
Second, and more importantly, Hoxby testified that people in poor school districts have a “lower demand” for education and therefore deserve what they get. It was hard to believe she said this out loud. This sentiment is the basis for every shortchanging of “those people” that could be imagined. Poor people live in tenements because they don’t want to live in nice homes. Poor people shop at convenience stores in food deserts because that’s what they like best. It’s just a short walk from here to the 1970 New York Times article that proclaimed slum kids can’t learn. Hoxby’s testimony oozed racial and class-based discrimination whether this was Hoxby’s intent or not. Hoxby’s opinion was also based on the incorrect assumption that poor people paid less for their schools and therefore deserved less.
Hoxby’s claim that poor people had a “lower demand for education” didn’t account for the fact that our clients paid higher education taxes than homeowners in wealthy districts. It also missed the fact that, with lower incomes, taxpayers in the poorer communities committed a higher percentage of their incomes to pay education taxes.
A homeowner in Pittsfield at the time of our trial in 1996, for example, paid a $25.26 school tax rate. On a $60,000 home, this was $1,515.60 a year as compared to the owner of a $240,000 mansion on the lake in Moultonborough who paid a $5.56 school tax, or $1,334.40 a year. As the residents of the poorer districts paid more in taxes, whether considering the rate of taxation or the amount of the annual payment, in terms of Hoxby’s economic theory this should have meant they had a right to demand more because they paid more.
The other problem with the economists’ theories is that their economics opinions ignored who went to school and what the purpose of public education is. Children don’t generally choose where they are born or where they live. The quality of their education in a single state (or, I would argue, in America) should not be determined by geography.
A strong democracy is inclusive. It doesn’t depend upon a child getting a good education only if her parent can afford the price of admission by buying a fancy house on a lake. The children of Claremont will have the same right to vote as the children of Lebanon. They shouldn’t be poorly equipped to participate in New Hampshire’s democracy.
This left economist, Erik Hanushek. Hanushek taught at the University of Rochester and, for a small fee, he would come to your state and offer an opinion that, in education, money doesn’t matter. Unlike any other activity that requires resources, schools did not do better—all other things being the same—when provided with more resources.
Hanushek was the state’s last witness. He was to be the great crescendo of their case.
We knew what he would say and so spent much of the trial asking witnesses if poor school districts had more resources would it help them provide a better education to their children. We also asked witnesses from the wealthy districts what they did with their more plentiful resources to help the children in their districts. By the time we got to Hanushek, the writing was on the wall. Hanushek changed his opinion from “money doesn’t matter” to “money spent well matters.” The crescendo became a phhhtttt.
It’s my hope that the NH Supreme Court will reject Jason Sorens’ economic theories and respect the history and power of the legal precedents that make up the Claremont line of case. There is reason to worry, though. Chief Justice MacDonald is a fan of the Koch Network, having been an officer of the Josiah Bartlett Center. Justice Pat Donovan was part of the duo who called all those economists to testify at the 1996 trial.
Finally, NH’s state primary election is on Tuesday, September 10th. There are many good candidates running for state office from state rep and state senate to the executive council and governor. There’s also a contested race for Congress in CD-2. NH residents can register to vote at their polling place up through the day of the election. (Just bring a photo ID and be prepared to show you’re a US citizen, 18 or over and a resident of the voting district where the poll is located. You can fill out an affidavit if you don’t have documentary proof.)
Concord, Bow and Hopkinton voters are fortunate to have three good candidates running for the Senate District 15 seat. I’ll be voting for Rebecca McWilliams for Senate. At a time when climate change, housing, protection of reproductive rights, and, of course, education are top of mind, Rebecca brings a lot to the table. She’s been in the State House for three terms. She collaborated with outgoing Senator Becky Whitley in passing bills like the “momapolooza” childcare bill. She’s a trained architect who cross trained as a lawyer. She knows housing, is passionate about climate change and can more than handle herself when it comes to standing up for civil rights.
Rebecca McWilliam for State Senate.
Editor’s note: InDepthNH.org takes no position on politics or candidates but welcomes diverse opinions at nancywestnews@gmail.com
