State Reacts to New Ed. Funding Plan

By Dan Gorenstein on Thursday, June 19, 2003.

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Opinions on the new education-funding plan vary.

Supporters applaud it for eliminating donor towns, and capping education spending.

Critics say the state won’t pay it’s fair share of education costs.

New Hampshire Public Radio’s Dan Gorenstein reports.

This week, Senate and House lawmakers brokered a deal that will significantly change education funding.

But next year the changes are less significant.

If this bill becomes law, the statewide property tax would go from $5.80 to $4.92 per $1000 dollars.

That move helps offset the increase in property values seen around the state.

The state would also target 10million dollars from the general fund to some of the most property poor communities.

The real change to education funding comes in 2005.

The legislature has agreed to adopt Senator Ted Gatsas’s plan.

While details remain foggy, former Representative Doug Hall explains the basic premise behind the Senator’s plan.

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:00 the G. plan is similar to something that is used in other states. Essentially says that to the extent that in your town you have insufficient property value to raise this amount for pupils, we will give you a grant that is what you would have collected for taxpayers if you had more property value.

Hall says the key difference between the current law and the Gatsas plan is that Gatsas ties state funding increases to a consumer price index that grows at 2% a year.
Hisotrically, according to Hall, school expenses have grown at a rate of 8-9%.

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:05 if your personal spending is increasing 9% a year. But your salary is increasing 2 ½ % a year, than at some point, you have a problem, b/c your spending is going up faster than your income. So you have to make a decision, am I going to curtail my spending, or am I going to have to find a way to generate additional income. In the case of school districts, the way they can generate additional income is to raise their local property tax rate. Their alternative decision is to alternate their spending.

Local decisions on education budgets is one key component Senate President Tom Eaton likes about the proposal.

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1:12 it puts them in charge of their own budgets, instead of receiving a check from the state that they can use for whatever they want. They are going to have to tighten up their budget and see if they are happy with everything they are doing.

Both Senators Eaton and Gatsas are confident communities will make more fiscially-driven budget decisions under the law.

Gatsas, unlike Hall, says a more accurate measure of education spending growth is at 5-6%.

At the end of the day, he says the system is more fair.

4:15 in the senate version Allenstown gets more money than Amherst, that’s the way the formula is supposed to work when you are distributing money to communities that can’t do it on their own…the state avg. being a number and Allenstown being below that avg. so we target funding to that community. Amherst is closer to that avg. so they get less money.

Attorney Andru Volinsky, who represented Plantiff towns in the Claremont lawsuit, doesn’t see the Gatsas plan providing much help to towns like Epsom.

2:05 Epson is a local community that just cut music and art from its budget b/c it can’t afford to keep up with those costs. That is when the state is contributing at the current level. Next year or the year after, I don’t take much solace that they are targeting reduced amount of aid better. B/c when we get to the end of the day and the state is in a budget crisis, they can target less and less money.

Most critics, including Volinsky, point to the Consumer Price Index as the primary problem that limits the state’s contributions.

For Ted Jankowski, who represents the donor towns, he’s happy that the Legislature has so intentionally crafted an education funding plan that does away with the concept of donor towns.

1:37 the most important thing is that the legislature has taken a very very sig step forward in terms of eliminating donor towns…3:16 there’s no place else where local property taxes…pay to educate kids in other towns, so you have good schools, like Portsmouth laying off teachers b/c of this issue. It’s important to recognize that it’s very sig. That the state has recognized this is a problem and go forward and deal with ed. Funding.

Both the House and Senate must pass the plan. Governor Benson has yet to indicate whether he will sign or veto the measure.

For NHPR News, I’m DG.