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School funding compromise in the state budget

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Funding for public schools was at the heart of the conflict over the state budget between Democratic leaders in the Legislature and Gov. Chris Sununu, a Republican. The compromise budget which passed on September 25 sees both sides give a little. It has received mixed reactions from municipal and school leaders.  

A brief history of the school funding debate 

Controversy over school funding in New Hampshire largely comes down to property taxes. Local property taxes pay for the bulk of public-school costs. Towns with higher property values can raise the money they need through a relatively low tax rate. Towns with lower property values, however, must charge higher rates, and can run into resistance from taxpayers when it comes time to set school budgets. That’s caused debate – and several lawsuits - over whether the state should foot more of the bill for public schools. 

There’s also controversy over how state education money is distributed.  

For the last several years, the state has given a set amount of money to each school per student. There’s extra cash for kids who need special education services, for students eligible for free or reduced-price lunch, and for English language learners.  

Some schools also receive stabilization grants. These were put into place in 2012. They were intended to help ease the pinch for schools with declining student enrollment numbers. The 2012 stabilization grants kept funding steady at 2011 levels but starting in 2016, they began to decline by 4% each year. For some towns, that has meant millions of dollars less in funding.  

The war over school funding in the 2020-2021 budget 

Democrats in control of the state Legislature had ambitious plans for increasing state funding for public education, particularly to towns with higher poverty rates or lower property values. The House budget included a new tax on capital gains which would’ve been used to significantly bump up school funding. The Senate budget cut that out, but still included an additional $95 million in funding.  

Gov. Sununu’s budget proposal also included more money for schools, but unlike the House and Senate budgets, it wasn’t in the form of more cash per pupil, whether across-the-board or for particular groups like kids eligible for free lunch. Instead, Sununu’s extra education dollars were in the form of one-time spending on specific initiatives. (All three budgets – governor's, House and Senate – did add money to fund full-day kindergarten students the same as other grades.)  

The compromise 

With the 2020-2021 budget that eventually passed, the governor and legislative leaders met somewhere in the middle. The budget does restore stabilization grants to 2011 levels. It also includes more funding for certain groups of students – but only for one year, 2021. Here’s a detailed breakdown of the education funding compromise 

  • Stabilization grants go back to 2011 levels. 

  • In 2021 only, schools where 48% or more of kids are eligible for free or reduced price lunch will get an extra $350 per free-lunch-eligible student. Schools with between 12% and 47% of kids eligible for reduced lunch will also get extra money on a sliding scale.  

  • In 2021 only, towns with a total property value of $350,000 or less per student will get an extra $1,750 per pupil. Towns with property values of between $350,001 and $999,999 per student will get additional money on a sliding scale.  

What comes next for school funding 

It will be up to a future Legislature, elected in 2020, and possibly a future governor to decide what to do next about school funding.  

They’ll likely have some guidance on that front from a commission on education funding which was also written into the new state budget. That commission will consist of lawmakers, government officials, outside experts and key stakeholders. It is charged with looking more broadly at how New Hampshire funds public schools and will issue a report with recommendations in September 2020. 

There’s also a lawsuit working its way through the New Hampshire courts. A superior court judge ruled earlier this year that the state wasn’t fulfilling its education funding obligations, but that case is now being appealed to the state supreme court. 

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