AG Peter Heed says current and proposed school funding plans are unconstitutional

Full text of letter from Attorney General Peter W. Heed to Governor Craig Benson, published by the Nashua Telegraph on May. 13, 2004

April 27, 2004

Dear Governor Benson, President Eaton, and Speaker Chandler:

As you know, you are all named Defendants in the Claremont lawsuit which is still pending in the New Hampshire Supreme Court. It is with respect to litigation concerns that we write this letter. Last Spring, we sent you a letter and met to discuss our concerns regarding the constitutionality of the current school funding law. During the Fall of 2003, my Office worked with the legislative study committee and assisted in drafting language that made current law reflect the spreadsheets that legislators used to pass the law, and language that modified current law as the study committee requested. Throughout this process, my staff continued to express concerns regarding the constitutionality of the current law. These comments, as is appropriate while the Claremont lawsuit is still pending, were made in private to key legislators, staff, and legal counsel.

We recently reviewed a proposed amendment to SB 302 that House Finance, Division IV, is creating. We provided our comments regarding the technical issues surrounding the bill - such as which equalization year figures are used, whether average daily membership figures are used or headcounts, etc.

We, however, believe that it is time to reiterate our ongoing concern with existing law and our increased concern with this amendment.

The biggest challenge that existing law faces is that the cost of an adequate education is determined by taking the total property value statewide and dividing it by the number of students in the State. This then becomes the average cost per pupil, with some slight weighting for circumstances such as high school and special education. We believe that this process for determining the cost of an adequate education does not comply with the Claremont decisions or the companion decisions issued as advisory opinions. Claremont I and Claremont II state that it is the Legislature’s responsibility to determine what the cost of an adequate education is, provide that education, and fund it. Claremont I, 138 NH 183, 184 (1993); Claremont II, 142 NH 462, 475-76 (1997); Opinion of the Justices (Reformed Public School Financing System), 145 NH 474, 478 (2000) (“It is not possible to determine the level of funding required to provide the children of this State with a constitutionally adequate education until its essential elements have been identified and defined”) Existing law does not attempt to determine the cost of an adequate education except to base it on property value. As we stated last year, we think it will be tremendously difficult for us to mount a substantial defense of this law if it is challenged.

We are now more concerned after seeing the draft amendment to SB 302. While it makes little sense to discuss whether something makes an unconstitutional law more unconstitutional, in the context of school funding, if something becomes “more unconstitutional,” it is more likely to be challenged in court. The draft amendment does three things of particular concern: 1) in Section 7, RSA 198:40-b, subsection IV is deleted and replaced with a new subsection; 2) the word “adequate” is struck throughout the statute; and 3 schools are not receiving their full grants under Section 8.

With respect to the first issue, the deletion and replacement of RSA 198:40-b, this is a section that we noted last year was unconstitutional. It continues to be unconstitutional in our view and has now become more unconstitutional. The amended section now provides that any money raised in what formerly were known as “donor communities” is now clearly to stay and be spent in those communities “before raising any additional local education tax revenues locally.” This means that the money raised under the new version of the statewide property tax is to stay in the donor communities and be spent there.

A less obvious type of system that would have returned money to the donor communities through a special abatement was found unconstitutional in the Court’s Opinion of the Justices (School Financing), 142 NH 1892, 899-900 (1998). The Court’s reasoning was that although poorer towns would be fully funded, the owners of property in poorer towns would pay taxes at a higher rate than those in towns with a surplus of revenue, which would receive the special abatement. We believe that the same situation exists in the draft amendment and that this section will be found unconstitutional as well.

Further, this is the type of “favoritism” that causes the Claremont Coalition to mobilize.

With respect to striking the word “adequate” from the statute, it again raises flags with the Claremont Coalition communities. Whether the word is in the statute or not, educational adequacy is what the Legislature is required to provide. Striking it will cause questions and criticism from the education community.

And finally, under Section 8, many schools are scheduled to receive only 80% of their calculated aid. The statute has other transition grants built into it to try to bring those amounts up to 90%. However, even at 90%, we believe it is still unconstitutional. Under this system, the Legislature is acknowledging that it created a formula for determining the cost of an adequate education but is only funding that amount between 80% and 90%. The testimony before House Finance confirmed that this was what was happening because “there is only $428M budgeted and that’s all we can spend.” See Testimony of Senator Gatsas. Legally, there is no justification for spending less than what the cost of an adequate education is determined to be and requiring municipalities to make up the difference. In fact, the Supreme Court has previously held that the State cannot shift its financial burdens to the municipalities:

The bill contains legislative findings which acknowledge that its proposed funding mechanism would rely, in part, upon local property taxes to pay for some of the cost of an adequate education. These findings directly contradict the mandate of Part II Article 83, which imposes upon the State the exclusive obligation to fund a constitutionally adequate education. Opinion of the Justices (Reformed Public School Financing System), 145 NH at 476.

Further, there was testimony before House Finance that the Legislature only has to fund education for students in poorer towns. This is not correct:

First, the New Hampshire Constitution imposes solely upon the State the obligation to provide sufficient funds for each school district to furnish a constitutionally adequate education to every educable child .The constitution mandates statewide adequacy - not statewide equality. It is, however, the State’s obligation to underwrite the cost of an adequate education for each educable child.

Opinion of the Justices (Reformed Public School Financing System), 145 NH at 477-78.

We are, of course, willing to continue to assist with technical writing, but we wanted to clearly alert you to the fact that we do not believe that current law or this amendment will survive a constitutional challenge. I would be happy to discuss this matter with you at your convenience.

Very truly yours,
Peter W. Heed
Attorney General

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More on public school funding:

Read the Nashua Telegraph's coverage, "AG warns of school funding problems."

The Portsmouth Herald recently called for a permanent solution to public school funding in an editorial, "NH public education needs funding solution now."

"Support public engagement and legislation to maintain the constitutional right of all students to an adequate education" is the Foundation Priority of the 2004 Children's Agenda of the New Hampshire Child Advocacy Network.

Read the NH Supreme Court's "Claremont" school funding decisions on the Claremont Coalition's Web site.