CONCORD, N.H. – In a pair of rulings on Monday, Rockingham Superior Court Judge David Ruoff found two major components of how the state funds education to be unconstitutional: parts of the taxation scheme to raise money for education, and how little the state contributes to education expenses.
In one decision, Ruoff said the state’s current contribution of $4,100 per student is unconstitutional, since it does not meet the state’s constitutional requirement to “the opportunity for an adequate education.”
The average cost per pupil was $19,399 in the 2021-2022 school year, according to the New Hampshire Education Department. Ruoff noted that the Legislature should have the final say in determining how much the state must contribute to its school districts, but that the amount should be at least $7,356, “although the true cost is likely much higher than that,” he said.
That means the state needs to contribute at least $537 million more to New Hampshire Schools, Ruoff wrote.
The Contoocook Valley School District first brought the lawsuit against the state in 2019, and since then 18 other school districts joined as plaintiffs. The lawsuit argued the state was putting the burden of paying for education onto municipalities. In April, there was a three-week bench trial on the matter. The plaintiffs argued the state should contribute at least $9,900 plus transportation costs.
The State did not present evidence defending the amount it currently pays to school districts, but argued plaintiffs brought forward the wrong kind of evidence.
In his decision, Ruoff pointed to Part II, Article 83 of the New Hampshire Constitution, which requires the state to “provide a constitutionally adequate education to every educable child in the public schools in New Hampshire and to guarantee adequate funding.”
He used state law to determine what’s included in an adequate education: instruction in english/language arts and reading, math, science, social studies and civics, government, economics, geography, history, the Holocaust and genocide education, arts, world languages, health and wellness, physical education, engineering, personal finance literary, and computer science.
New Hampshire is the state that contributed the smallest percentage of local education revenue to local public schools, contributing 31 percent, according to 2021 US Census Bureau data. Neighboring Vermont contributes 88 percent, and nationally, the average is 45 percent.
In the Granite State, local public education is mostly funded through local property taxes. In the 2021-2022 school year, local property taxes made up around 70 percent of public school district revenue, according to the New Hampshire Fiscal Policy Institute.
But relying on local property taxes leads to disparities between districts where property values are high and those where they are not.
In a separate but related decision, Ruoff found the Statewide Education Property Tax, or SWEPT, to be unconstitutional. SWEPT is a tax that raises money for education in New Hampshire.
In a note on the SWEPT ruling, Ruoff said he intentionally released the two orders together because he wanted the parties to be able to consider how a higher state contribution will impact the taxation scheme used to raise some of that money.
SWEPT is raised locally and kept locally. In most places, those funds don’t cover the full cost of education, so there’s also an additional local tax. But if a town raises more than they need through SWEPT, they get to keep the excess. That happens in about 17 percent of communities, according to Reaching Higher, a nonprofit education think tank based in Concord.
Ruoff said communities that raise more than they need can no longer keep the excess, starting with the next budget cycle. Those funds instead have to go to the state and “must be used for the exclusive purpose of satisfying the State’s adequacy aid obligations,” he said.
Ruoff pointed to Part II, Article 5 of the state constitution, which said taxes must be “equal in valuation and uniform in rate.”
That lawsuit was brought by a handful of New Hampshire taxpayers in June 2022, and is often called the Rand lawsuit because Steven Rand is the first plaintiff listed.
Governor Chris Sununu called the decision “deeply concerning” and said it was “an overreach into a decades-long precedent appropriately placed in the hands of our elected representatives in Concord.”
“New Hampshire currently spends among the most per capita on public education than nearly any other state,” he continued.
Leadership of one of New Hampshire’s unions representing educators disagreed.
“Today’s rulings confirm what we have known all along — the state of New Hampshire has failed to adequately fund public education, instead downshifting costs to local communities,” said Megan Tuttle, president of NEA-New Hampshire, in a statement. The NEA is a union that represents some of the state’s educators.
“While we are encouraged by this recognition of the current inadequate funding scheme, we know this is just one more step in the long process of truly adequately funding public education in our state to ensure all students have the opportunity to succeed,” she continued.
Andrew Cline, president of the free-market think tank the Josiah Bartlett Center, criticized the ruling that the state should spend more on education. “The court’s method for determining the cost of an adequate education is absurd,” he said in a written statement.
“Trying to figure out the true cost of an adequate education by measuring what monopoly school districts spend is like trying to figure out the true cost of package delivery by measuring Post Office prices before the arrival of FedEx and UPS,” he continued.
“The truth is that absent a competitive marketplace for education, no one knows what an adequate education really costs. All we know is what government school districts spend, and that’s not the same thing,” he said. Cline is also the chair of the State Board of Education, but did not comment in that capacity.
Zack Sheehan, executive director of the NH School Funding Fairness Project, called the decision “big wins for New Hampshire students and taxpayers.”
He noted that Ruoff’s decision highlighted another flaw of the SWEPT tax: some unincorporated places in New Hampshire are subject to the tax, but don’t have any students, so those places were setting negative tax rates to offset the payment of SWEPT, which can only be used for education.
“These are exciting rulings, but for their impact to be felt, the legislature has to get to work and bring our school funding statutes into line with this and all past school funding rulings,” he said, noting that he wants the state to accept the ruling, rather than appealing it to the New Hampshire Supreme Court.
A statement from the Department of Justice said the state has received the court’s order. “We will review it and consider potential next steps,” said Spokesperson Mike Garrity. The Department of Justice represents the state in these cases. Garrity did not indicate if the state would appeal the case or not.