A lawsuit filed in Grafton County in late June requesting the state discontinue its reliance on local property taxes to fund education could be consolidated with the ConVal School District case, which focuses on the costs of a constitutionally adequate education.
“These cases are so similar,” said attorney Natalie Laflamme, part of a legal team that includes Andru Volinsky and John Tobin, who represented the Claremont School District in the 1990s in two cases that set the stage for the latest case. “Sometimes, when cases are similar enough you can consolidate them.”
The suit, brought on behalf of three taxpayers, claims that the state’s formula for using local property taxes to fund education is unconstitutional. Laflamme emphasized she didn’t know if a consolidation of the lawsuits would happen, but said her team believes it would be good in terms of efficiency.
“So far there’s no feedback,” she said, adding that ultimately any decision to consolidate the cases would be up to the courts. “Even if all parties say, ‘Yes, we want to consolidate,’ the courts could say no, or all parties could say, ‘We don’t want to consolidate’ and the court could then say, ‘You must.’ We’re waiting to see what happens.”
ConVal’s attorney, Michael Tierney, said the two lawsuits are distinct cases. The ConVal lawsuit, originally filed in March of 2019, is focused on determining the components and costs of a constitutionally adequate education, Tierney said, adding that the case will return to court in April of 2023.
“Components and costs of a constitutionally adequate education, for base adequacy, before differentials, is more than three times what the state is providing in base adequacy funding,” Tierney said, adding that transportation costs are included as part of the base adequacy costs. “That’s what the ConVal case is all about, determination of a base adequacy funding.”
While the ConVal case is still in the discovery phase, Tierney said the state already knows what the cost of an adequate education is but has not provided that funding. He explained the way a constitutionally adequate education will be proven in court is through expert witnesses, correcting the state’s formula for base adequacy closer to $10,000 per student.
ConVal’s co-plaintiffs include Manchester, Nashua, Claremont, Derry Co-Operative, Fall Mountain, Grantham, Hillsboro-Deering, Mascenic, Mascoma Valley, Monadnock, Newport, Oyster River, and Winchester. Officials from each of the districts will be testifying to demonstrate actual costs.
The latest suit cites Claremont II, the 1997 New Hampshire Supreme Court case that ordered the state to redesign its school funding system within 17 months, and focuses its argument on Part II, Article 5 of the New Hampshire Constitution requiring that taxes be “proportional and reasonable.”
New Hampshire funds education through a series of adequacy grants and local property taxes that have been the subject of controversy for 30 years. Adequacy grants, set by the state, make up 21% of the total cost of education and are calculated according to a formula starting from a base cost of $3,708.78 per student.
In addition to base adequacy funds, districts receive money for special education students, English-language learners, students who qualify for the federal free- and reduced-lunch program and students who are not deemed proficient in reading by third grade. These programs are known as “differentiated aid,” which brings the state’s contribution to $4,578.10 per student.
The average cost of educating a student in New Hampshire is approximately $18,000.
Another form of funding education is the statewide education property tax (SWEPT). Whatever excess a town raises in its SWEPT account is deducted from what the state would pay the town in adequacy education grants. But the town or city does not give excess SWEPT money back to the state. Despite being called a state tax, municipalities are free to put excess money back into their budgets.
Local property taxes represent the remaining 60% of revenue funding public education in New Hampshire. In a state with varying property valuations, Laflamme said this formula is not sustainable.
Laflamme, who attended Berlin public schools, used that city, which has a total property valuation of $329,938,675 and a local education tax rate of $15.20 per $1,000 assessed valuation, as an example to illustrate how widely property values vary across the state and said this is what’s at the heart of the latest lawsuit.
“There’s only so much you can do with property values,” she said, pointing to the sacrifices that towns like Berlin, with lower property valuations, must make in order to pay for education. “[School districts] put as many of the resources as they can into their schools, but at the expense of filling potholes or having other city services.”
And this, she said, is the tradeoff that a lot of communities in New Hampshire have to make.
“We’re at the point now where there’s no where else to cut,” she said. “When education funding is based on local property values, and you can’t create more property value out of thin air, you’re stuck with where your revenue has to come from. This is where our suit comes in, because the taxpayers are just picking up the slack.”
Former Superior Court Judge John Lewis, who has written about the Claremont lawsuits from the 1990s, referred to a case from the state of Washington where the state Supreme Court held the legislature and state government in contempt, fining them $100,000 a day until they came up with a solution.
“I think that this kind of struggle will go on in this state as well. The courts don’t want to deal with this by being put in a position of micromanaging,” he said. “It’s not reinventing the wheel like Claremont I and II and this is a big, big opportunity; we’ll just have to see what happens. Andy, John and Natalie are all great lawyers who know this area of law and they need the resources. And these two lawsuits are duplicative.”
At the heart of the education funding issue is the cost of an adequate education, Laflamme said.
“And for the purpose of both of these lawsuits, the state is not even coming close. The state is obviously failing to be uniform in rate with these taxes. Whether it’s x, y, or z, it’s not what the state is paying, and taxes are not uniform,” she said.