School Funding Cases in New Hampshire

in New Hampshire Litigation

Historical Background

In 1999, New Hampshire changed its school funding system to include a statewide property tax, in response to rulings by the New Hampshire Supreme Court in Claremont School District v. Governor, 635 A.2d 1375 (1993) (Claremont I), Claremont v. Governor, 703 A.2d 1353 (1997) (Claremont II), and Claremont v. Governor, 744 A.2d 1107 (1999) (Claremont III).

In Claremont I, the court held that the New Hampshire Constitution “imposes a duty on the State to provide a constitutionally adequate education to every educable child and to guarantee adequate funding” and remanded the case for trial. The court also noted that the legislature and the governor have the responsibility to define “the specifics of” an adequate education.

In Claremont II, the court declared the then current education finance system unconstitutional because it violated the state constitution’s requirement that all state taxes be “proportional and reasonable.” Under that system, taxpayers in lower wealth school districts paid as much as four times the local property tax rate of those in higher wealth districts. The court also ordered the state to follow a four-part remedy: define a constitutionally adequate education; determine the cost of such an education; fund an adequate education throughout the state; and ensure its delivery through an accountability system.

Compliance Proceedings

In 2001, plaintiffs returned to the Supreme Court, claiming that the state’s new funding system remained unconstitutional and that the state had not complied with the court’s 1997 remedial order. After briefing and oral argument, the court ordered the state to hold school districts accountable for both inputs and outcomes, in Claremont v. Governor, 794 A.2d 744 (2002). The state promptly enacted an accountability statute.

Londonderry v. State

Several school districts that lost revenue after the 2005 changes to the state’s school funding system filed suit, and in 2006, the trial court granted plaintiffs’ motion for summary judgment. On appeal, the supreme court affirmed the lower court’s finding that the state had failed to define an adequate education, ordered the state to do so by June 30, 2007, and stayed action on other issues because they flow from the definition.

The New Hampshire Legislature met the June 30 deadline. The new adequacy definition provides content standards that schools have to meet and requires all school districts to offer an opportunity to attend kindergarten to every student. Thirteen New Hampshire districts do not currently offer kindergarten to all students.

The legislation also directs a legislative committee to identify “enhanced needs” schools and propose additional resources for those schools. While the original definition proposed in the Senate would have required lawmakers to direct specific additional resources to “enhanced needs” schools, a compromise with the House scaled this back. In addition, a new committee, made up of lawmakers and a representative from the Governor’s office, issued a new study for determining the cost of an adequate education under the new definition on February 1, 2008.

On October 15, 2008, the New Hampshire Supreme Court dismissed Londonderry Sch. Dist. v. State, 958 A. 2d 930 ( N.H. 2008). The court terminated its jurisdiction on the grounds that the case was now moot since the particular statute that the plaintiffs had attacked in their 2005 complaint had now been replaced. Plaintiffs maintained that the revised funding system is still unconstitutional, but the court held that they would need to file a new action to litigate these issues.

Recent Events

Prompted by the Claremont decisions, lawmakers have, over the past fourteen years, voted on over eighty proposed constitutional amendments that address judicial review of eudcational funding issues. The attempt to gain legislative approval for an amendment, subject to voter approval, that would restrict the power of the courts in adequacy cases came closest to fruition in 2012, but ultimately failed to obtain the necessary legislative approval to put it on on the ballot. On May 31, 2012, the Republican leaders of the two legislative houses reached a compromise with Governor Lynch, a Democrat, over the language of the amendment. After passing in the senate, however, the proposed amendment failed to receive the necesseary three-fifths majority in the house in order to appear on the November ballot.

In August 2015, the Dover School District sued the state failing to adequately fund its schools. The suit challenges a state statutory funding cap that limits year to year increases under the current funding formula to 108% of the prior year’s amount. Dover claims that the cap violates the Supreme Court’s rulings that students are entitled to “adequate” funding and that the cap especially detrimentally affects school districts with rising enrollments. It claims that about $14 million has been withheld from the city under that cap in recent years. According to the complaint, 79 municipalities in the state are detrimentally affected by this cap. Dover is asking the court to declare the funding cap unconstitutional to return the $14 million withheld under the cap to the city.

In October 2015, the office of the Attorney General of New Hampshire, announced that they would not defend the state cap on funding in the Dover litigation the office does not believe that it is constitutional for the state to provide districts less than lawmakers have determined that it takes to provide an adequate education.. However, both the House Speaker and the Senate President have intervened in the case to defend the cap statute. Senate President Chuck Morse stated that “Any law the Legislature passes and votes on should be defended.”

In September, 2016,Judge Brian T. Tucker upheld the district’s  claims in City of Dover v. StateThe decision may mean an immediate extra $1.4 million for Dover, and a potential boost for other communities with caps on the amount of “adequacy funding” they receive.

The Court held that placing a cap on the amount of increase that a school district may receive in a particular year is unconstitutional because:

Curbing the amount of the grant deprives Dover of the full amount of what the legislature deemed necessary to sufficiently fund the opportunity for an adequate education in Dover…..When this occurs, the school district is left short of funds to pay the cost of an adequate education and either must make do with the amount of state aid allotted or make up the shortfall on its own. Either outcome violates Part II, Article 83, because the state ‘has the exclusive obligation to fund a constitutionally adequate education’ and may not shift any of this constitutional responsibility to local communities….

The Court issued a permanent injunction against any future withholdings, although it denied the district’s claim to recoup funds withheld since 2009.

Costing-Out

In 1998, consultants hired by a legislative commission issued a report on the cost of an adequate education in New Hampshire. The report offered four alternatives based on the average operating expenditures in successful districts. The legislature revised the funding system by choosing the alternative that produced the lowest cost basis, subtracting 10%, and not including a provision for inflation in future years.

In 2000, consultants hired by another legislative commission released a more limited study of educational costs. The legislature adopted some of the study’s recommendations in its changes to the funding system in 2005.

Useful Resources

Drew Dunphy, Moving Mountains in the Granite State: Reforming School Finance and Defining Adequacy in New Hampshire (Campaign for Fiscal Equity, Inc. March 2001)

Last Updated: September 2016

Previous post:

Next post: