Op/Ed: The Case for Targeted Education Aid

By Jim Roche

for Business and Industry Association

BIA For more than 10 years, New Hampshire has been paying for an “adequate” education for primary and secondary public school students across the state. State spending on public education is in addition to what local communities raise and spend. Adequate education funding did not come without pain. The Legislature raised business taxes — the Business Enterprise Tax (BET) and the Business Profits Tax (BPT) — in 1999 and again in 2001 to help pay for increased education funding. According to the Tax Foundation, a nonprofit educational foundation advocating for sound tax policies, New Hampshire businesses are now among the most highly taxed in the country (46th worst corporate tax rank as reported in the Tax Foundation’s recently released 2012 Business Tax Climate Index).

State spending on local education was necessitated by various NH Supreme Court rulings collectively known as “Claremont.” Prior to the Claremont rulings, almost all money for schools was raised locally through property taxes. Post-Claremont, the state has contributed significant revenue to pay what the Legislature, as required by the Supreme Court, determined to be the cost of an “adequate” education. An “adequate” education includes knowledge of reading, writing, mathematics, biology, civics, the arts and more.

The most recently passed two-year state budget calls for the state to distribute $818 million in education grants this fiscal year and $825 million in FY2013. Aside from some minor amounts set aside for school districts with higher numbers of low-income students, state education money is distributed on an equal per-pupil basis, regardless of the property wealth of each school district. This means that roughly the same amount of per-pupil money is distributed to the state’s wealthiest communities, like Waterville Valley, Rye and Meredith, as it is to property-poor towns such as Claremont, Allenstown or Berlin. No other state distributes education money this way. It’s easy to understand why. Every dollar sent to a school district that may not need it is one less dollar that could go to a district that truly does.

Although court activity related to education funding has diminished in recent years, state support for primary and secondary education continues to be a highly controversial topic at the State House. There are those pressing for more state aid, saying New Hampshire is not meeting its court-mandated commitment to funding an adequate education. Others point to the controversial statewide property tax as an “accounting gimmick,” something that requires endless tinkering and new formulas to avoid so-called “donor towns.”  Some in the Legislature argue the courts “got it wrong” in the first place. There should be no responsibility on the part of the state to fund education. What is needed, they argue, is a way to remove the courts from any constitutional oversight of education. Finally, there are those that believe education is a shared responsibility between the state and local municipalities. The BIA — New Hampshire’s statewide chamber of commerce — is one of them. However, the state desperately needs the ability to target its limited funding resources to school districts most in need. And that requires a constitutional amendment.

The BIA has long supported a constitutional amendment that will allow the state to properly and thoughtfully target aid to those communities most in need. But the hurdles are high. Adding or changing our state constitution requires the approval of 60 percent of the House and Senate and two thirds of the popular vote. Ideally, both legislative chambers and major political parties, in addition to the governor, would agree on language for a constitutional amendment. Unfortunately, that is not now the case. The House, Senate and governor have to date been unable to agree on language with which all sides can live. Couple this with large blocks of legislators who either want to remove judicial oversight completely or who agree with the court’s original decisions and see no need to change and you begin to appreciate the difficulty in finding consensus. And yet this is an opportunity that, if squandered, may not become available again for decades. In the meantime, our current formulas and revenue sources to fund public education are simply not sustainable.

The BIA believes that a constitutional amendment allowing for targeted education funding gives a little bit of something to all sides, regardless of political persuasion. For fiscal conservatives, there is no doubt a constitutional amendment will release pressure that builds every two years as the Legislature scrambles to find adequacy dollars, including money for wealthy communities that don’t need it. A constitutional amendment does not automatically mean the state will spend less. It will enable spending decisions to be based on actual need rather than a “one-size-fits-all” giveaway. Progressives can also feel comfortable supporting an education funding amendment designed to target limited education dollars to those school districts and students most in need.

A targeted aid education funding amendment won’t solve all problems associated with public education, but it does put New Hampshire on the right track by restoring this state’s ability to make smarter investments in education spending . Sending money where it is most needed and will do the most good is good public policy.

Jim Roche is president of the Business and Industry Association, New Hampshire’s statewide chamber of commerce and leading business advocate.