Some Takeaways From the New Hampshire Center for Public Policy Studies’ Recent Study on Education Spending in New Hampshire

The New Hampshire Center for Public Policy Studies recently released a study titled Education Finance in New Hampshire – Headed to a Rural Crisis.  The Center is decidedly left of center, but the study is well worth the read because it contains a lot of useful information.  Here are some takeaways, albeit probably not the takeaways the authors intended.

First, by way of background, as I demonstrated ten years ago here and here, the Claremont decisions are political decisions.  That is, they are inconsistent with the text, the structure and the history of the New Hampshire Constitution and represent activist judges setting policy under the guise of interpreting the law.  In other words, the judges didn’t neutrally apply the law; they decided to write their policy preferences into the constitution and attempted to make it appear that they were merely interpreting the constitution.

The policy objective of the Supreme Court was to transform the way public education was financed and delivered in New Hampshire or, in the presumptuous words of Justice Horton in dissent in 1997’s Claremont II decision, to “effect needed reform”:

HORTON, J., dissenting: I agree with the majority that a proper education, beyond the basics, should include “[a] broad exposure to the social, economic, scientific, technological, and political realities of today’s society.” I also agree that the current financing matrix for education is far from desirable, for many of the reasons expressed in the majority opinion. My problem is that I was not appointed to establish educational policy, nor to determine the proper way to finance the implementation of this policy. Those duties, in my opinion, reside with the representatives of the people, the Governor, the legislature, and the respective magistrates and legislative authorities in the respective school and taxing districts. … I write separately to explain to the students and taxpayers of this State why I am unable to effect needed reform.

With respect to financing public education, which is the focus of the Center’s study, the goal of the activist judges was that the representative branches would impose a redistributionist tax, such as an income tax or a sales tax or a statewide property tax or some combination of these taxes, to pay for the cost of an “adequate education,” which they presumably expected would be close to average per pupil spending, which in 1999 (when the representative branches folded and implemented legislation to comply with Claremont) was about $5,500.00 per student.

In other words, the court wanted a sea change.  Local property taxes would no longer be the primary source of financing for public education.  Instead some State tax or taxes would be used to collect approximately $1.1 billion (assuming around 200,000 students at $5,500 per student), which the State would then distribute on an equal per pupil basis. Only at that point, according to the court could the State “target aid,” that is send additional money, to poorer communities.

Didn’t happen that way.  The representative branches, outsmarted the court.  The cost of adequacy was set materially lower than average per pupil spending (around $800 million), and while a statewide property tax was imposed the rate was set low enough to minimize transfers between towns.  Then a package of other taxes was cobbled together (approximately $400 million) to fund the remainder of the “cost of adequacy.”  This graphic from the Center, which doesn’t count the statewide property tax, shows the true amount of State funding (funding not from taxing property in the municipality) on a per pupil basis over time:Another way that the representative branches outsmarted the court was that over time the formula to determine the cost of an adequate education was tweaked so that true adequacy funding (funding not from taxing property in the municipality) is mostly targeted.  Consider the following table from the Center’s study:The Center offers the table to show the anticipated effect of demographic changes on the amount of adequacy funding a municipality receives.  But it also illustrates that education financing looks far different from what the court envisioned.

Rather than every municipality receiving adequacy funding -that is something close to average per pupil spending-  from the State and then the State providing additional money to poorer communities, adequacy funding is being targeted.  For example, Bedford receives $2,000 per pupil while Berlin receives over $9,000 per pupil.  This clearly is not what the court had in mind.

To be clear, it is bad policy to provide any State education funding to towns like Bedford that can easily pay their own way.  But the system we have is far better from a policy standpoint than the system the court sought to impose.

Another takeaway is that education spending has skyrocketed since Claremont II was handed down.  Consider this table from the Center’s study (only partially reproduced here):
Per pupil spending has more than doubled and in some cases nearly tripled.  But would anybody claim that the quality of public education has doubled or tripled?

That brings me to the final takeaway, the Center does not even discuss whether all this additional spending is increasing the quality of public education.  It is of no moment that, for example, Manchester has increased spending from $4,668.00 per student to $11,034.00 per student.  What matters is that other towns have increased spending more.

In the private sector the goal is to spend less and deliver a higher quality product.  The producer and the consumer both profit.  In the public sector, the goal is just to spend more.

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