School Funding in New Hampshire: Why the System Doesn’t Work
Introduction
New Hampshire has long struggled with how to pay for public education. Unlike many states that rely on a mix of local property taxes and significant state contributions, New Hampshire leans heavily on local property wealth. This creates vast inequities between wealthy and property-poor towns, leaving some students with abundant resources while others face chronic shortfalls. Courts, policymakers, and citizens have been debating this issue for decades — and yet, the system remains broken.
How New Hampshire Funds Its Schools
- Local Property Taxes as the Backbone
- Roughly two-thirds of school funding in New Hampshire comes from local property taxes. Communities with high property values (such as Hanover, Rye, or Bedford) can raise significant revenue at relatively low tax rates. In contrast, property-poor towns (like Claremont or Berlin) struggle to fund even the basics.
- The Statewide Education Property Tax (SWEPT)
- Enacted in 1999 after the landmark Claremont court cases, the SWEPT is designed to raise funds for an “adequate education.” However, the tax is still collected locally and often benefits wealthier towns that can generate more than they need, leaving poor towns behind.
- State Aid Formulas
- New Hampshire provides some “adequacy aid” to districts, calculated per pupil. In 2024, the base adequacy grant was around $4,100 per student — far below the actual cost of educating a child, which exceeds $18,000 in many districts.
- Additional targeted aid (for poverty, special education, and English language learners) exists, but it does not close the gap.
Why the System Doesn’t Work
- Constitutional Mandates Ignored
- In the Claremont decisions of the 1990s, the New Hampshire Supreme Court ruled that the state has a constitutional duty to provide and fund an adequate education for every child. Yet, decades later, courts have repeatedly found the funding system unconstitutional because it pushes the burden onto local property taxpayers.
- Inequity Between Towns
- Wealthy towns can offer AP classes, STEM labs, arts programs, and modern facilities. Property-poor towns cut staff, defer maintenance, and rely on outdated resources.
- For example, in 2022, ConVal School District sued the state, arguing that the base adequacy amount was far too low to meet actual costs — and a judge agreed.
- Overreliance on Property Taxes
- New Hampshire prides itself on being an income- and sales-tax-free state. But this forces local property taxes to carry the weight of school funding. Homeowners in poorer towns end up paying far higher rates than those in wealthy towns, yet with fewer results.
- Political Gridlock
- Proposals for new funding streams — like broad-based taxes, business tax reforms, or expanded state aid — face strong opposition. The result is piecemeal reform that never addresses the underlying inequities.
The Human Impact
- Students in poorer districts face fewer opportunities, from extracurriculars to advanced coursework.
- Teachers in underfunded schools often juggle larger classes and fewer resources.
- Property taxpayers in struggling towns shoulder tax rates double or triple those of wealthier communities, fueling frustration and out-migration.
Recent Legal and Policy Battles
- In 2019, the ConVal lawsuit argued the state’s per-pupil grant grossly underfunded real costs. Courts sided with ConVal, though the legislature has yet to fix the formula.
- In 2023, another judge ruled that the SWEPT is unconstitutional because it creates uneven tax burdens across towns. Lawmakers face mounting pressure to overhaul the system.
Potential Solutions (and Roadblocks)
- Increase Statewide Funding
- Raise adequacy grants to reflect actual costs. Current proposals suggest $10,000–$12,000 per pupil would be closer to reality.
- Diversify Revenue Sources
- Consider modest, broad-based taxes or dedicated funding streams (meals & rooms tax, business taxes, lottery revenues) to reduce reliance on property taxes.
- Redistribution of SWEPT
- Ensure that “excess” SWEPT revenue from wealthy towns is redistributed fairly to poorer districts.
- Political Will
- Ultimately, change requires legislators willing to make unpopular choices in a state with strong anti-tax traditions.
Conclusion
New Hampshire’s school funding system is a textbook case of inequity: a state that celebrates local control but leaves property-poor towns struggling to meet constitutional obligations. Court rulings have repeatedly declared the system inadequate and unfair, yet legislative solutions remain elusive. Until policymakers commit to meaningful reform, the state’s children will continue to face vastly different educational opportunities based not on their abilities, but on their ZIP code.
References
- New Hampshire Supreme Court, Claremont I & II decisions
- ConVal School District v. State of New Hampshire (2019)
- NH Department of Education: Adequacy Aid Formula
- New Hampshire Center for Public Policy Studies reports
- NHPR reporting on education funding lawsuits
