Education Funding Commission grapples with system changes as deadline looms

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Students are pictured outside the now-closed Brown Elementary School in Berlin in this file photo. Photo/Paula Tracy

CONCORD, NH —The Education Funding Commission Monday grappled with the principles of a more equitable system as it nears its deadline to produce a final report.

Commission members could not agree whether the state has to pay for the entire cost of an adequate education or if local property taxes should be considered part of the state’s obligation.

But the members did agree the focus of any overhaul in the state’s education funding system needs to be student equity not who spends the money.

“The fundamental disagreement of why we ended up here today centers on student equity,” said commission chair Rep. David Luneau, D-Hopkinton. “The focus has not been on student equity, it is on who pays.”

A report done by the American Institutes for Research hired by the commission found students from property-poor communities do not achieve the same educational outcomes as students from wealthier districts.

The report found great disparity not only in educational opportunities but in communities’ ability to raise revenue for education which spikes property tax rates for poorer communities.

Monday the commission worked to fine-tune reports from its three committees: public engagement, adequacy and fiscal policy hoping to meet next Monday to finalize a report that is due Dec. 1.

The commission’s recommendations include a fundamental change in how the state determines an adequate education and how best to distribute money to produce it.

The new system would be based on student outcomes not educational inputs as the current funding system uses. The system would instead be based on student needs and a community’s characteristics in determining how much state aid each district would receive.

Currently, the state provides a basic adequate education grant of $3,709 per student as well as additional aid based on poverty, English as a second language and special education.

The new system would peg the cost of an adequate education at $17,000 per student.

Commission member Bill Ardinger said the commission wants to “tilt state budget support” to the communities that have the greatest need.

“The current spending results in a regressive distribution of resources,” Ardinger said. “We should try to direct state dollars to communities that need a break. I don’t care what you call it, but we should focus aid in a way that moves the graph in a better direction.”
He referred to a graph in the AIR report showing students in school districts with the least property wealth perform below students from property wealthier communities that provide their students more opportunities.

“How do we fix the problems is the question?” Ardinger noted. “The current spending formula does not fix the problem.”

But former Sen. Iris Estabrook, who chaired a similar commission more than a decade ago, said the current system is not a complete failure, but noted it has been weakened.

One of the key issues unresolved by the commission is whether the state has to pay the entire cost of an adequate education and whether local property taxes would be part of the state’s obligation.

Luneau said the state Supreme Court gave legislators broad latitude to address its rulings first giving the legislature deference to provide a solution.

But Estabrook said it told the legislature it had to fix the problem, but also said its patience has its limits.

Luneau said the court gave the legislature pretty wide authority to define an adequate education and how to pay for it.

The court’s position was it did not want the legislature “to hollow out” the education funding system — “we’re at that point now with the Conval suit — the judge said maybe we are closer to $5 than the average spend right now.”

Estabrook said that would dismiss part of the court’s decision. The current system may not be the greatest policy, but it was just what lawmakers thought the court wanted done.

Ardinger said it is not up to the commission to decide what the court intended, but to focus on what is the best policy.

“Frankly we’ve suffered because we’ve played ‘mother may I’ and not addressed the problem,” Ardinger said. “The legislative branch needs to come to decisions on what is the right policy course.”

The court ruling begs the question, he said, of how much locally delegated tax may be used to build a school finance system.
Several of the Supreme Court’s education ruling indicate the state is obligated to provide an adequate education to each child and to pay the cost of it as recently as 2008.

The commission also discussed two proposals presented by AIR to use a statewide property tax to improve taxpayer equity and student equity as well.

One plan would use only a statewide property tax the state would collect, unlike the current system which allows towns to retain the state property tax. Under the plan the rate would be $11.94 per $1,000 of equalized valuation

Another would require a mandatory minimum of a $5 per $1,000 of equalized valuation for each community. If a community does not need all the money to pay its education obligation, the community would retain the extra money as occurs under the current system.

The rest of the statewide property tax — $7.13 per $1,000 of equalized valuation — would be collected by the state to be distributed as needed to give each school district the ability to provide its students with the opportunity to achieve the state average student performance.

Under the mandatory $5 plan, 70 percent of the communities would see their property taxes go down and 30 percent would see an increase.

The commission is also reviewing a circuit breaker program to help low- to moderate-income homeowners who could not afford their property taxes under the statewide property tax system.

Commission member Rep. Rick Ladd, R-Haverhill, asked what they could say to the people in communities that have their property taxes increase under the plan. They are going to say it is not fair to them because you are taking their money, he said.

Luneau said ask if their property tax rate was below average before, and if is still below average with the increase and if the range among the state’s communities has tightened under the system.

Ardinger said some legislators in some communities may selfishly say “It is about my taxpayers in my community. I don’t care about kids in other communities. The answer is they are all our kids.”

“Many plans have come apart on the rocky shoals of self-interest,” he said.

Luneau said commission members want to concentrate on the general principles and recommendations in the report and not on whether the state is responsible for the first and last dollar of adequacy or a $5 per $1,000 mandatory contribution from every town and city is the plan.

“Student equity is the overarching objective here,” Luneau said. There are a number of funding approaches that can be looked at, “but at the end of the day if we are achieving student equity and also taxpayer equity, we will have made incredible progress and tilted the curve toward more progressive funding of public education.

“I do not want to get caught up in the quicksand of where things may be at right now,” he said.

Garry Rayno may be reached at