‘Life-changing’: Legislature weighs taking more from business taxes to nearly double base adequacy aid for education

Hopkinton Rep. David Luneau wants to nearly double New Hampshire’s contribution to public education.

The Democrat’s proposed legislation would raise the cost of an “adequate education” from $4,100 to $7,356 per student, per year. That comes with a hefty price tag, to the tune of a $500 million increase in education spending.

Luneau, while testifying before the Education Funding Committee this week said the cost, however steep, is one the state must shoulder.

“Our current school funding formula isn’t getting the job done, for students or taxpayers,” Luneau said.

He’s in the process of filing what he called a “package” of school funding bills, which will seek to direct more spending toward education. As Gov. Kelly Ayotte pushes for a leaner budget this cycle — and with multiple pending lawsuits that could compel the state to pay a greater portion of education costs — legislators are tasked with revisiting how New Hampshire’s school funding structure works.

Luneau said his legislation, including this bill on adequacy aid, could reform how public education is funded in the state.

House Bill 550 uses the figure for state aid set by a judge in the Contoocook Valley School District’s education funding lawsuit. The judge had ruled the state must increase its base adequacy aid to $7,356 to cover necessary resources like teacher benefits, instructional materials, technology coordinators, school counselors and more. The state has appealed that order, and the case’s fate is under consideration by the state’s Supreme Court.

Jessica Wheeler Russell, a member of the Merrimack Valley School Board, testified in favor of increasing base adequacy aid, both to equalize opportunities for students across the state and to give taxpayers some breathing room.

Russell said the biggest cost-drivers in education are mandated by law — including special education, health care and retirement funds — leaving towns and school districts on the hook to pay for services they have no choice but to provide.

The Merrimack Valley School District exceeded its budget by $2 million last school year, which administrators have said was largely due to unforeseen out-of-district special education tuition and transportation expenses.

“Due to the state not providing adequate funding … it places an undue burden on local taxpayers, especially in those districts with lower property resources,” Russell told the committee.

The additional $3,200 per student could cut down on local taxes, which would be “life-changing” for some people, Russell later told the Monitor, especially those who live on a fixed income and parents of young families. She spoke on her own behalf, she said, not that of the school board.

She also hopes more state funding could help local districts like hers provide more opportunity and competition, including investing in technology and security.

However, she said Luneau’s pitch alone isn’t enough.

“Bringing this to more of a 21st-century is a good start, and it’s starting to address the realities of what it actually costs to educate students now,” Russell said. “Not fully there yet, but starting to.”

How could thestate pay for it?

For starters, Wilmot Rep. Tom Schamberg has proposed allocating more from the business profits and enterprise taxes toward the Education Trust Fund.

In two separate bills, House Bill 255 and House Bill 318, Schamberg would put 59% of the revenue from each of those taxes toward education, a significant raise from the current 41%. Based on estimated tax revenues for fiscal year 2025, that would reallocate $226.8 million. The current versions of these bills wouldn’t raise taxes, only switch up where the revenue goes.

Schamberg pitched this legislation as a means to potentially eliminate the statewide education property tax. This increase alone wouldn’t quite be able to replace that tax, Schamberg said, but more legislation is on the way to supplement that.

Chichester Rep. Cyril Aures argued that instead of allocating more money, local school districts should reevaluate their spending practices. He said to some extent they have to run like a business.

“You just can’t keep throwing money into a business if you’re not getting an end result that’s any better,” Aures said, citing poor performance from some schools.

Rep. Susan Almy, a Lebanon Democrat, had one question for Schamberg: “How are you going to pay for the rest of the government?”

Schamberg responded by saying the state should take a look at its own social programs and that it’d take “hard work.” He suggested the Legislature should look at how to surmount the challenge but said he doesn’t currently have any other suggestions.

Almy wasn’t the only one concerned. House Republicans appeared skeptical of these bills, expressing concerns over how to balance the budget – and the resulting funding gap – if the business tax allocations were reshuffled.

Last year, Republicans also voted to eliminate the interest and dividends tax, which brought in an estimated $184.3 million in its final year.

Charlotte Matherly is the statehouse reporter for the Concord Monitor and Monadnock Ledger-Transcript in partnership with Report for America.