New Hampshire Not Alone In School Finance Headaches


WASHINGTON - On the eve of a court-imposed April 1 deadline, New Hampshire legislators are still trying to find an acceptable formula to solve the state's public school financing crisis.

Hours before the Democratic-controlled state senate voted last week to impose a state income tax, following the lead of the Republican-led House, Democratic Gov. Jeanne Shaheen told the lawmakers she would not retreat on her vow to veto such a measure. Her stance might have caused the New Hampshire House to have second thoughts. On reconsideration Tuesday, it voted to kill the plan, moving the issue back to square one.

New Hampshire isn't alone in struggling with a school finance crisis, although it probably has the most extreme problem at the moment. Lawsuits designed to force a restructuring of how public education is financed have also been brought in 16 other states, and one of these, Ohio as of this month, missed its deadline by one year for a permanent solution. The latest cases contend that it is not enough for states to eliminate any imbalance in spending between rich and poor school districts. In addition, they argue, states must see to it that students receive an adequate education in safe school buildings.

"States continue to be in the throes of finance litigation," Terry Whitney, a senior education policy analyst for the National Coalition of State Legislatures (NCSL) told "Two of the most thorny cases over the last several years should come to a conclusion this year -- Ohio and New Hampshire."

To finance their share of public education from kindergarden through high school, states use a variety of funding formulas that generally combine income tax, corporate taxes, sales taxes and other fees. Most states pick up 50 percent of the bill for public education, and local governments levy property taxes to cover about 44 percent of the tab. The federal government kicks in the remaining six percent of the cost.

Hawaii, New Mexico and Washington provide the most state-level education funding in the nation. The money is doled out on a per-pupil basis, as well as categorically to cover special programs.

New Hampshire is unique because the state pays only eight percent of the cost of educating its elementary and secondary public school students, leaving the lion's share to localities. Complicating matters is the state's historic refusal to increase business taxes or implement an income tax. At a NCSL school funding meeting this winter, New Hampshire state senator Beverly Hollingworth predicted that the ratio of state to local money going to education in the Granite State will change more dramatically than in any other state as a result of the current crisis.

Whitney said the solutions that are ultimately devised in New Hampshire and Ohio could become a model for the 15 other states that are now either in the throes of litigation or fashioning a response to a court decision.

Those states include Alabama, Alaska, Colorado, Connecticut, Florida, Idaho, New Jersey, New Mexico, New York, North Carolina, Minnesota, South Carolina, Tennessee, West Virginia and Wyoming.

The wave of school finance lawsuits started in California in 1971. Of the 50 states, only Delaware, Hawaii, Iowa, Mississippi and Nevada have not been sued, according to the NCSL.

"Most state legislatures base their (education budget) on the history of enrollment change and the amount of money available," said John Myers, a partner in Augenblick and Myers, a consulting firm specializing in school finance."Courts are starting to say that isn't good enough -- there must be a connection between what is provided and what you expect the kids to know and do," he said. Depending on where in this country a child lives, annual per-pupil expenditures range from $1,500 to $15,000.

Kentucky was the first state to decide what it wanted students to know. Lawmakers based education spending on what it would take to get students to that point, and set up ways to assess whether the goals are met. Its funding system falls in line with a national movement toward standards-based reform.

Here is a summary of what is happening in other states:

  • Last November, voters in Florida approved an "adequate education" constitutional amendment that said students should be literate and knowledgeable. Since then, some poor school districts have sued the state, saying that low student test scores show that the state has not provided an adequate education.
  • Colorado is facing an adequacy suit that alleges decrepit school buildings are not conducive to an adequate education. Construction costs are covered by property taxes, and plaintiffs argue that the state should shoulder more of the capital costs.
  • North Carolina, West Virginia and Connecticut are also dealing with adequacy cases. New Mexico joins Colorado, Ohio and Texas in suits brought in part or whole on school construction issues.
  • Tennessee has seen a new twist in the litigation spree with a suit that claims the state is responsible for the discrepancy in teacher salaries between rural and metropolitan areas.
  • A New York suit is the first of its kind being argued under the Civil Rights Act of 1964. But since it was filed, Philadelphia Mayor Ed Rendell, along with city school officials, have sued Pennsylvania under the same act. The Philadelphia plaintiffs argue that since Pennsylvania ended subsidies to lower income students, minorities have been shortchanged. They won a preliminary judgment, but on appeal the State Supreme Court ruled against the city.
  • There are two cases in Minnesota -- one brought by the NAACP, the other by the St. Paul School District. The NAACP says the state has failed to provide an "adequate" education for Minneapolis students many of whom are low-income. St. Paul's pending 1996 suit complains that the state wasn't giving enough money for an adequate education for impoverished and special needs students. Parties in both cases are trying to negotiate a settlement.

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