WMUR review: Is it time for a ‘Claremont III’ education funding lawsuit?

They’re back. They say the state has dodged its constitutional responsibility to fund an adequate level of education for too long. Now, it is time to bring the issue to the forefront again, as it was 25 years ago, and make it a voting issue, they say.

And, they say, it may even be time to sue the state again.

More than 20 years ago, Andru Volinsky and John Tobin were key members of a legal team that brought the Claremont school funding lawsuit against the state.

A six-week-long trial in Superior Court in 1996 focused on whether the state’s system of funding elementary and secondary public education almost entirely through local property taxes was fair, equitable and constitutional.

The Supreme Court set the stage for that trial with a 1993 decision known as Claremont I. The court held that under Part 2, Article 83 of the state constitution, the state is obligated to provide a “constitutionally adequate public education and to guarantee adequate funding.”

In 1997, the court ruled 4-1 in the landmark Claremont II decision that the state had failed to meet its constitutional responsibility to provide an adequate education. State aid to education at that time totaled only 8 percent of the total bill, with the remainder from federal funds.

The property tax-based system forced communities with low property values and small tax bases to either impose high property tax rates or provide less money for students than “property-rich” communities, which were able to provide more funding for education with lower tax rates.

The Claremont II ruling prompted two decades of debate, proposals, bills and spreadsheets in many attempts at finding solutions.

Volinsky said that with less media attention on school funding in recent years, there has been a perception that the issue has been solved. But, he said, despite the Claremont II ruling, New Hampshire continues to provide one of the lowest levels of state aid to education in the nation and the disparity between property-rich and property-poor communities continues.

While the state was obligated under Claremont II to define and fund a constitutionally adequate education for each student in the state, the system is not much different today than it was in the early 1990s, Volinsky said.

In 1999, the Legislature passed and then-Gov. Jeanne Shaheen signed into law a statewide property tax that was supposed to meet the state’s obligation. The initial version of the tax called for “donor” and “receiver” towns. Under that system, some property-rich communities would raise more money from the statewide property tax than the amount deemed needed to fund the per-pupil cost of adequacy. Those communities were required to send the excess funds to Concord. The state was then supposed to distribute those funds to the communities with “poorer” tax bases.

The system created a rivalry pitting the “property-rich” communities against the “property-poor” ones. The tax was quickly revamped to eliminate donor communities by allowing the rich communities to keep the excess amount of money they raised beyond the per-pupil adequacy amount. But this “special abatement” was ruled unconstitutional because it did not address the disparate local tax burden between rich and poor communities.

The Legislature eventually made up for property-poor communities’ loss of that funding by creating a new formula in 2008 that included “fiscal capacity disparity aid.” That provided communities with the lowest median family incomes with $2,000 per pupil beyond the base adequacy grant. At the time the adequacy grant was $3,450 per pupil.

Communities with slightly higher media family incomes, but still below the state average, received fiscal disparity grants of $1,250 per pupil.

“Fiscal capacity disparity aid” was eliminated by the Legislature in 2011, but to soften the blow of having property-poor districts lose the aid, the Legislature created another funding component, known as “stabilization grants,” to keep the overall per-pupil funding at the same level in 2012 as it had been in 2011. Those grants totaled $160 million.

The program remained intact for four years.

In 2015, the Legislature ended stabilization grants, but rather than do so in one massive cut, a program was enacted to reduce them by 4 percent a year over the next 25 years.

Now, three years into that gradual reduction program, the effects are being felt.

Tobin, a former executive director at New Hampshire Legal Assistance, said the Legislature’s decision to cut stabilization aid was “the last straw.”

He wrote in an op-ed in the New Hampshire Bar News last spring that the problem “has now reached constitutional dimensions, so much so that a new funding lawsuit is urgently needed.” He said Monday that he has begun recruiting a legal team “in case we need one.”

But he said that until the Legislature has a chance to act next year, a lawsuit “has been back-burnered.”

“The preferable way to address this is through the Legislature and the governor,” Tobin said. “Even if we were to go back to court and win, it will still be up to the Legislature and the governor to solve it.”

Volinsky, who is now an executive councilor, said that his role as an elected official disqualifies him from participating in a lawsuit against the state. But he and Tobin are pushing for a political solution.

‘School Funding 101’ forums

Volinsky and Tobin have been working for several months across the state to mobilize support among parents and local school officials to make education funding a major issue in the upcoming election.

They have led “School Funding 101” forums in Pittsfield, Newport, Derry, Berlin and Keene. Forums are scheduled for Haverhill on Tuesday, the Mascoma Regional School District in Canaan on Thursday, Concord on Oct. 2 and Rochester on Oct. 10.

Volinsky produced a chart showing the effect of the annual 4 percent cuts. Pittsfield, for example, received a $2.1 million stabilization grant in fiscal 2012. But it has lost $87,000 in each of the past three years, with each cut requiring a 33 cents per $1,000 increase in its local property tax rate to maintain level funding.

Berlin’s stabilization grant was $5.4 million in fiscal 2012, but since 2015, it incurred nearly $220,000 in annual cuts, requiring annual hikes of 55 cents per $1,000 to maintain level funding.

“This is unconstitutional. It’s very clear,” Volinsky said.

Volinsky said that more than 100 people attended the forum in Pittsfield in mid-June.

“We had to stop the questions after an hour and a half. People were ready to march on Concord,” he said. “And it became very clear to us that voters in these communities don’t understand that their own representatives and senators are voting against their own communities’ local interests.”

Volinsky singled out Sen. John Reagan, R-Deerfield, whose district includes Pittsfield.

“He has campaign signs that say he is a tax fighter, but he’s not fighting property taxes. He’s adding to his constituents’ burden every year,” Volinsky said.

Reagan, who chairs the Senate Education Committee, said the agenda of those who complain about the current system has not changed in several decades.

“The call is always for more money and that we have to have income tax,” he said. “They are trying to create an income tax because they want a bigger government.”

Volinsky and Tobin have prepared a memo titled “school funding talking points” that is distributed at the forums.

The talking points do not specifically blame either major political party. They blame both parties.

“For more than a decade, the Legislature and New Hampshire’s governors have allowed this problem to get worse,” the memo says.

“We’ve been saying that in every forum,” Tobin said. “This is an important public policy issue, and neither Democrats nor Republicans have addressed it.”

The memo includes “sample questions to ask political candidates” for state offices, including governor and the Legislature, such as, “What will you do to make sure that the state updates its adequacy grants to realistic levels?” Another suggested question is, “As an immediate measure, would you support a moratorium on cuts to stabilization aid?”

“It’s gratifying that people are paying attention, but it’s sad that we are having to do this 20 years later,” Volinsky said.

Total cost of education: $3 billion

The total cost of public education in New Hampshire is now more than $3 billion a year. Property taxes raise $2.2 billion of the total — $1.8 billion from local property taxes and $363 million from the statewide property tax. The statewide tax is now nothing more than an accounting tool to designate certain revenue raised at the local level as state revenue, Volinsky said.

But together, property taxes pay for 72 percent of the cost of education, with an additional $644 million, or 21 percent, provided in true state aid and $174 million, or nearly 6 percent, provided in federal funds.

In the 2015-2016 school year, the Rye school district spent $19,535 per pupil while the total rate of the state and local school property tax in the community was $6.20 per $1,000, according to state Department of Education data provided by the two attorneys. In Pittsfield, the per-pupil expenditure was $14,723, but the total education tax rate was $18 per $1,000. The reason was that Rye has much higher property values.

Volinsky said the current system discourages businesses from moving into communities with high tax rates, and it discourages communities from allowing the construction of affordable housing.

Such housing, he said, would further erode the property values of the communities in which they are located. He said a lack of affordable housing contributes to the state’s workforce shortage and discourages young people from settling in the state.

Broad-based tax vs. constitutional amendment

Inevitably, the debate over ways to develop a more equitable system for funding education in New Hampshire centers on two opposing potential solutions — a broad-base tax and a constitutional amendment to overturn the Claremont I and II decisions and give full power to the Legislature and governor to allow the current system to continue or change it.

Gov. Chris Sununu said in July that he wants a constitutional amendment and would “fight for it any day of the week – as soon as we get a Legislature that will actually pass one.”

“I’m all for it. And even just amendment to just (say) ‘the Legislature decides.’ Your representatives, the most representative body on the planet decide amongst themselves what the formula is, how the funds get dispersed and ensure there is an adequate education,” he told a forum in Rochester, according to Foster’s Daily Democrat.

Sen. Reagan said “it is a ridiculous argument” that 4 percent annual reductions in stabilization grants will hurt school districts. He said it is a small percentage of school budgets.

At the same time, Reagan said, he wants to introduce legislation to vastly increase the base adequacy grant to “$9,000 to $10,000 per student, which will level things out.” He said the increase will be funded through the statewide property tax.

Under the current system, base education aid is $3,636 per student. Districts receive an additional $1,818 for each low-income student participating in the federal free or reduced-price lunch program, an additional $1,956 per special education student, and an additional $711 per students who are “English Language Learners.”

Tobin wrote in his op-ed that the additional target funding can push the maximum targeted grant to $8,121 per pupil.

“When these additional targeted allocations are taken into account, the average amount of state funding is approximately $4,476 per pupil, but, according to the New Hampshire Department of Education, the average actual annual per pupil cost in the 2016-17 school year was approximately $15,310,” he wrote. “The percentage of the cost of K-12 education that is borne by the state government in New Hampshire is among the five lowest out of all 50 states.”

But Reagan said, “It’s ludicrous to say that the system is unfair to the property-poor towns. They control their own budgets and set their tax rates. We in New Hampshire are in love with local control, and this is what happens with local control.”