Proposed new state property tax formula unveiled to NH school funding commission

Proponents say plan would lower local rates in 70% of municipalities, but could rise in others

School FundingThe Commission to Study School Funding got its first look this week at how a statewide property tax could be applied to fulfill the state’s constitutional obligation to fund an adequate education with taxes equal in valuation and uniform in rate throughout New Hampshire.

The American Institutes for Research, or AIR, prepared the tax plan, drawing from the data that informed an earlier report measuring disparities in the funding of public schools and achievement of their students. That report included a weighted formula for distributing state aid to overcome these disparities among districts, which in turn underpins the projected amount of state aid required to ensure the opportunity for an adequate education to all students.

The tax plan would fund the distribution formula. It consists of a two components. A mandatory minimum contribution would be required of every municipality in the form of local property tax. The local contribution would be supplemented by a statewide property tax, the proceeds of which would be distributed among school district using the weighted formula.

Using current data, AIR calculated that the local property tax, levied at the uniform rate of at $5 per $1,000 of assessed value, would raise $972,851,220 million, leaving the remaining obligation of the state at $1,988,832,632. The $601,909 in state aid from the potpourri of taxes composing the Education Trust Fund, would leave a balance of $1,386,932,632 to be raised by the statewide property tax at a rate of $7.13 per $1,000 of assessed value.

In other words, the total education property tax rate would be $12.13. AIR calculated that the plan would lower education property taxes in 167 of 237, or 70%, of cities and towns.

Alternatively, if the mandatory local contribution were eliminated altogether and the state funded the entire cost of an adequate education with a statewide property tax, its obligation, less the money from the Education Trust Fund, would rise to $2,322,535,667, and the tax rate would fall to $11.94, still representing a decrease for 167 municipalities.

Weighted distribution

When AIR compiled data to measure disparities across school districts with respect to both their property wealth and student populations, they found that academic achievement varies among districts with the number of students eligible for free and reduced-price lunch — the common measure of poverty — as well as receiving special education services and learning English language.

The weighted distribution formula starts from a base cost of $5,974 per student, including transportation costs. Students eligible for free and reduced priced lunch, special education services and learning English language would be weighted by factors of 1.51, 4.26 and 0.99 respectively. Other weights would apply to the size of the school, decreasing with increasing enrollment. And middle school students would be weighted more than high school students.

For example, a high school student eligible for free and reduced price lunch attending a school with 1,000 students would carry a cost of $19,953 {$5,974 + $9,021 ($5.974 x 1.51) + $2,509 ($2,509 x 0.42) + $2,449 ($5,974 x 0.41)}.

Using the model weighted formula, the simulated funding for each district would range between $12,000 and $25,000. Districts with the greatest needs, measured by the number of students with meager means, special needs and language learning, would receive more funding while those with fewer needs would receive less.

AIR’s presentation included examples of how the proposed taxation and formula would effect selected districts.

In Claremont, funding would total $33.9 million, or $20,222 per student, of which the local and state shares would be $3.6 million and $30.3 million respectively. Funding in Durham would amount to $12.8 million, or $13,737 per student, $6.1 million raised locally and $6.7 million from the state. And in Wolfeboro funding of $9,166,439, or $12,892 per student, would consist entirely of the local contribution of $11,198,189.

Drew Atkinson of AIR acknowledged that property taxes would increase “substantially” in some municipalities in order to lower them in others. And, since there is nothing to keep a municipality from raising property taxes, there is nothing to keep them from doing so to sustain or increase their current levels of per student spending. The plan would build a floor, but not a ceiling.

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