First week of case includes testimony on districts’ budgets

Rockingham County Superior Court Judge David Ruoff is presiding over the lawsuit brought by ConVal and 10 other New Hampshire school districts. (Michael Moore/The Keene Sentinel)

When the ConVal School District’s challenge to the state’s system of funding public schools opened before Justice David Ruoff in Rockingham County Superior Court on April 10, Solicitor General Anthony Galdieri remarked, “This case is solely about whether school districts can shift costs to all the taxpayers across the state.”

The school districts pursuing the case, however, would say the question is whether, after three decades, the state will fulfill its constitutional obligations as ordered by the NH Supreme Court in its foundational Claremont rulings in 1993 and 1997.

Then, the court held, the state constitution places on the state an “unequivocal legal duty” to provide every child an adequate education and “to guarantee adequate funding.” It further ordered that, to the extent property taxes are levied to fund this obligation, they must be “equal in valuation and uniform in rate throughout the State.”

This is ConVal’s, as well as Ruoff’s, second bite of the apple. The district, composed of nine towns in southwestern New Hampshire, first filed suit in 2019 in Cheshire County Superior Court, claiming that the state was failing to meet its obligation to fund an adequate education. At the time, Ruoff found the state in breach of its constitutional duty to fund an adequate education, but declined to specify either its components or its cost, which he acknowledged are the prerogatives of the Legislature.

Both the state and the plaintiffs appealed Ruoff’s ruling to the Supreme Court, where the justices found the under-lying facts in the case so “vigorously disputed” it could not render a decision and remanded the case to the Superior Court for the second trial now underway.

State funding formula

In mounting the state’s defense, Attorney General John Formella has marshaled a legal team of seven, three assistant attorneys general and four lawyers from Stinson LLP, a firm with 1,000 employees based in St. Louis with an office in New York.

Throughout the litigation, ConVal has been represented by Michael Tierney and Elizabeth Ewing of Wadleigh, Starr & Peters of Manchester.

Since the litigation began, ConVal has been joined by 10 other school districts around the state that altogether serve 32 municipalities, including Manchester, Nashua, Claremont, Oyster River, Derry and Lebanon.

The plaintiff districts argue that the base adequacy per pupil calculated and distributed by the state in fiscal years 2021 and 2022 was of $3,708 and $3,786, respectively, while expenditures per pupil for kindergarten through 12th grade averaged $19,399 throughout the state.

“The State does not currently provide sufficient funds for each and every school district to provide a constitutionally adequate education,” their petition concludes.

In her opening statement for the plaintiffs, Ewing noted that “the state will present no evidence that a constitutionally adequate education can be provided for $3,700.”

Moreover, the plaintiffs highlight a number of other flaws in the school funding formula. Although no district spends less than $400 per pupil for transportation, the state provides only $315, far less than the statewide average cost of $827.

The state formula applies teacher student ratios of 1:25 for kindergarten through 2nd grade and 1:30 for grades 3 through 12, though no district in the state reports a ratio greater than 1:17.5. Data from the Department of Education indicates that the statewide ratio has not topped 1:12.6 for a decade.

They also point to the state funding formula, which allots $11,728 for teacher benefits. But contributions to the state retirement system, federal employment taxes and health insurance premiums amount to more than $27,000.

And, the plaintiffs say, the state requires schools to employ the services of a nurse costing an average of $65,562 in salary and benefits, but its funding formula makes no provision for this expense. Likewise, the state requires each school administrative unit or single school district to have a superintendent, costing an average of $158,000, and large districts must employ an assistant superintendent and business manager, but it allots no funding for the positions.

In addition, the state requires schools to provide food service, whether profitable or not. In fiscal years 2017 and 2018, New Hampshire schools spent $70.2 million on food service and collected $36.6 million in food service revenue, posting a loss of $33.6 million — $200 for each of the state’s 166,321 pupils. All of it was borne by the school districts.

Finally, the plaintiffs point out the funding formula assigns just $195 per pupil toward the cost of operating and maintaining school facilities, while data from the Department of Education indicates an average cost of $1,462 annually across the state.

According to ConVal Superintendent Dr. Kimberly Rizzo-Saunders, to meet its obligation to fund an adequate education the state must provide $9,929 per pupil in base adequacy as well as “actual” transportation costs to every school district.

The plaintiffs note that the effect of insufficient state funding is to place a disproportionate share of the cost of public education on municipal property taxpayers, whose tax rates vary widely throughout the state contrary to the ruling of the Supreme Court. However, unlike another suit pending before the court — which hinges on the constitutionality of both the statewide education property tax and local school property taxes — the tax issue is not a major thread in ConVal’s pleading.

Tension between branches

In defending the state, Attorney General Formella’s team is not seeking to justify the state’s contribution to funding public schools. Instead, they primarily mount their defense on two propositions, one that relies on the separation of powers and the other that restricts the cost of an adequate education to the factors enumerated in statute.

First, the state asserts that the court “lacks jurisdiction to award any relief to Plaintiffs other than a simple declaration that the State is, or is not, complying with its constitutional duties.” Instead, the means of meeting the state’s constitutional duties is vested in the Legislature, which “possesses the exclusive discretion to determine what programs and what levels of funding are necessary and appropriate.”

“This case,” the state’s brief reads, “presents one or more non-justiciable political questions due to a lack of judicially discoverable and manageable standards, the impossibility of deciding the issues without making policy determinations of a kind clearly reserved to nonjudicial discretion.”

The tension between the judiciary and the executive and legislative branches of government has dogged the school-funding controversy since it began, once prompting more than 40 unsuccessful proposals to amend the state constitution in a vain effort to diminish, if not extinguish, the role of the court.

In 2006, the Supreme Court expressed its concern “that this court or any court not take over the Legislature’s role in shaping educational and fiscal policy,” but then added, “the judiciary has a responsibility to ensure that constitutional rights not be hollowed out and, in the absence of action by other branches, a judicial remedy is not only appropriate but essential.”

The state also claims that school districts spend significant funds in excess of what is required to provide a constitutionally adequate education. These expenditures stem from “matters of local school district choices, local district philosophies and local district accounting practices” and are applied to “infrastructure and other resources that are not needed, inefficient and/or obsolete.”

Among these expenses, the state claims, are the costs of transportation and operating and maintaining school facilities, though the state concedes “a learning environment generally requires things like light and heat.”

Likewise, the state denies that schools require nursing services. As for the issues of teacher-student ratios and teacher benefits packages, the state describes the data school districts report to the Department of Education as “self-reported, unaudited and unverified.”

Moreover, the state sought to disallow Superintendent Rizzo-Saunders, along with 18 other school officials from the plaintiff districts — superintendents, business administrators and school board members — from testifying as expert witnesses. Ruoff denied the motion.

First week of trial

The notion that school budgets are bloated by expenses above and beyond the cost of providing an adequate education was the overriding theme of the first week of the trial.

In the first week of testimony. Senior Assistant Attorney General Sam Garland questioned Rizzo-Saunders for two days about the details of the ConVal district budget, aiming to identify those unnecessary and inefficient expenses beyond what is required for an adequate education, frequently asking, “Is that a matter of local choice?”

Rizzo-Saunders explained how she developed the estimate of $9,929 per pupil as the cost of base adequacy, using what she called “conservative figures,” such as pegging the cost of a teacher to the salary of first-year rather than veteran teacher and eliminating the cost of athletic teams altogether. At the same time, she noted that some significant costs, like teacher retirement contributions, are beyond the district’s control and others, like salaries and benefits, affect the recruitment and retention of personnel.

Business administrators from the Winchester, Hopkinton and Fall Mountain regional districts testified that the cost of base adequacy could range from $11,000 to $14,000 per pupil.

Education Commissioner Frank Edelblut, who has spent much of his tenure seeking to support private and other alternatives to public education, is scheduled to testify on April 18, after NH Business Review’s deadline.