Reliance on property taxes for school funding creates an inequitable system, says Claremont attorney

According to Tobin, the deterioration of the school funding formula has reached "constitutional proportions."

633

Attorney John Tobin highlighted worsening inequities in New Hampshire’s schools in an article reposted by InDepthNH. Tobin, who argued the landmark Claremont case in support of communities, says that funding the state’s schools by relying on local property taxes creates a deeply inequitable and burdensome tax system.

From InDepthNH:

In recent months the public discussion about school funding has focused on the impact in schools across the state of declining enrollments, rising costs, and reductions in “stabilization aid,” one of the components of the current state funding. But these demographic, financial, and funding trends are only exacerbating two chronic and unresolved core problems in our school funding system: the low level of state aid and the heavy reliance on a deeply inequitable property tax system as the primary source of education funding. In my view, and that of many others, this deterioration has now reached constitutional dimensions, so much so that a new school funding lawsuit is urgently needed…

The yearly per-pupil amount of state adequacy funding is fixed by statute, and for 2017-18 the basic allocation is $3,636.06 per pupil, with additional targeted allocations that can increase the maximum grant to $8,121.57 per pupil for certain categories of students. 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 NH Department of Education, the average actual annual per pupil cost in the 2016-17 school year was approximately $15,310. 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.

Local funding, almost exclusively through property taxes, made up 60.1 percent of all school funding in the 2016-2017 school year. Even in the immediate aftermath of the Claremont case, the State never came close to paying for the cost of an adequate education, and State funding has stagnated for almost a decade while costs have continued to rise. So the burden on the local property owners is increasing while the State’s share of the funding shrinks.

As a result, property taxpayers are bearing an increasing portion of what is constitutionally the State’s responsibility through nominally “local” school property taxes that are imposed at tax rates that vary enormously among school districts. More than 20 property-poor school districts tax their residents at above-average rates, but the revenue they can generate is so limited that their per-pupil spending is lower than average, even with the state aid they receive. These school districts are cutting teachers, eliminating programs, and taking other painful steps to reduce expenditures. At the same time, children in school districts with more valuable real estate benefit from higher per-pupil spending, while their parents pay property taxes at much lower rates…

Certain property-poor districts do receive “stabilization aid,” which is an allocation of funds that was meant to soften the losses when “fiscal capacity disparity aid” was eliminated and the allocation for low-income children was reduced by the Legislature in 2011. In the 2016-17 school year, stabilization aid totaled $151 million, so it is a significant portion of the State’s current overall funding system. With stabilization aid, the total of Berlin’s state funding amounted to more than $9,000 per pupil, more than 50 percent of its total per pupil spending of $15,319. However, because of Berlin’s dismally limited tax base, its education tax rate is among the highest in the state, notwithstanding the considerable stabilization aid it receives.

These inequities and hardships will persist until the State is providing most of the funds ($1.79 billion) now being raised by local school districts through highly disproportionate tax rates. (As noted in the report from the NH Center for Public Policy Studies cited above, the annual 4 percent reduction in stabilization aid is and will be a serious financial loss for the property-poor districts like Berlin which are already beleaguered by the current funding system.)

Learn more about the school funding formula in the state, its effect on student outcomes, and more:

Source: Worsening Inequities in New Hampshire School Funding | InDepthNH