By Rosemary Ford and Caitlin Agnew
This article has been edited for length and clarity.
Property taxes pay for a lot of important things in New Hampshire, in particular public education. New research from the N.H. Fiscal Policy Institute estimates that Granite State property taxpayers pay 72% of the dollars spent on public schools. Why do they carry the majority of this cost, and what can be done to change that? Madeline Randall discusses how public education is funded in New Hampshire, as well as some of the new laws impacting education, with Ben Reynolds, senior policy analyst at the Fiscal Policy Institute, and Anna Brown, the executive director at Citizens Count.
Madeline Randall:
To start us off, can you tell us how education funding is calculated in New Hampshire.
Ben Reynolds:
About $4.15 billion in total revenue goes toward public schools for education. The revenue comes from various sources, but the three main areas come from local sources, state sources and federal sources.
With that, one of the main state sources is its “adequate education aid,” which is about $1.06 billion. The term “adequate education aid” is how the state defines its term for education aid that was set by the state Supreme Court's Claremont decisions in the 1990s. For that state adequate education aid, the state starts off by looking at the number of pupils that live within a community, it sets a base rate amount per pupil for that. The state also looks at those student characteristics as well as other community characteristics to help with determining the aid, and then sends that money directly to local governments.
Madeline Randall:
What role do property taxes play? And how can that vary from town to town?
Anna Brown:
In addition to that per-pupil adequate funding that Ben talked about, local property taxes are a significant part of school budgets, so it is up to each municipality to decide how much they want to add to that state per-pupil amount for their schools. That's most of what you're talking about when you're seeing your local property tax bills. So there's a local decision-making process that goes into it, which is unrelated to the state property tax rate, which is set across the state.
Madeline Randall:
Ben, tell us about your recent research concerning education funding. What were some of the main findings?
Ben Reynolds:
One of the main things that we saw was that property taxes made up about 72% of revenue for local public schools during the 2024-25 school year. Really only about $700 million of that $4.5 billion comes from state revenue sources that aren't property taxes that are raised and retained locally. We also saw that the state’s share of total education funding has been declining over the last decade and that school costs have been increasing over the automatic 2% annual increase in the state's education funding formula.
Madeline Randall:
Let's talk a little bit about legislation. What happened in the last legislative session?
Anna Brown:
There are two big bills that are directly related to this. The first, House Bill 1563, created a three-tier structure for reimbursement for special education. We haven't talked about that yet in the school-funding formula, but the state does provide some more money per-pupil based on special education needs, if they're English language learners, if they're eligible for free or reduced lunch, and so on. The state tweaked that special education reimbursement formula — that is important insofar as some of those increasing school costs are coming from more students needing special education.
But particularly relevant to our conversation today is HB 1300. That bill in this upcoming general election and also in 2028 is going to have every municipality vote on a tax cap that would limit local school budgets. So this — as I said, it's already up to localities to decide how much more they're going to be raising beyond that per-pupil amount from the state — but this would usually get voted on as an option during the town meeting season in the spring. By putting it on the general election ballot, Republicans in the House and Senate are hoping, “OK, this will be a chance for more of the public to weigh in to say that we really want to limit local school budgets.” It remains to be seen if that is going to unfold – or if, as happened at many local meetings in the spring, voters continue to say, "No, this is what our schools need. We're not going to put a tax cap in place.”
Madeline Randall:
Why is New Hampshire ranked last in the nation for how much the state contributes to public education funding?
Ben Reynolds:
Looking at the amount of state revenue that goes towards the total revenue for public education — of the total $4.15 billion spent, the state's contribution is $1.06 billion. In other states, that ratio is kind of flipped, where it's a little more of a state contribution than local. But when you also look at it at a dollar basis per-pupil, the rankings do change a bit.
Overall, for looking at both local and state revenue of dollars per-pupil that go toward education, New Hampshire is ranked ninth. When you only look at local revenue dollars per-pupil for public education, New Hampshire actually goes up to fourth. When you pull it only for state revenue per pupil,, then we go down to 34th. So that percentage of the state revenue contribution, as well as the state dollars per pupil, New Hampshire on a state level is a bit lower than other states in terms of funding public education.
,Anna Brown:
I would just add that in addition to inflation, some particular areas that are really driving increased costs are health insurance costs for school employees, special education, and in fact the state prorates some of that reimbursement for special education. Prorate means that it's not going to give 100% of what theoretically it might. But this also is worth mentioning as part of a historical tradition in New Hampshire of local control, for better or worse.
Many legislators will argue that it is up to localities to decide how much they really want to fund their schools or not, and so some people see it as a virtue that there's very little state input, and that it's mostly on local taxpayers to raise the funds and make the decisions. That being said, there's also a lot of debate around the fact that some towns have much wealthier residents who have higher property values so it's easier for them to contribute more to schools, whereas property-poor towns end up with a much higher property tax rate to extract the same amount of tax revenue from their property owners. So there are questions of equity in the system.
Madeline Randall:
Do you think this could change in the future?
Anna Brown:
The first thing that I will say is New Hampshire, compared to many other states, has a shoestring budget, and as I mentioned, this is a bit of a choice. There's a lot of use of and reliance on nonprofits for other services that in other states would just be paid for by the government. This also means that a lot of these costs are falling on municipalities instead of at the state level.
For this to change, I think that we would have to see one of two things happen. First, I think there would have to be a new revenue source to come in. And since Republicans in New Hampshire have made very clear that they are anti just about any form of new tax, any form of new revenue — with very limited exceptions — that would mean Democrats taking the House, the Senate and the governor's office. That would be an uphill battle. We could have a whole other conversation about that, but certainly a sweep of all three would be hard to do.
We do then have to look and ask what's going to happen next in the state Supreme Court. It's been ruling on the issue of school funding for decades now, and we haven't seen major moves in the distribution between states and localities. If anything, it continues to really fall in the localities.
At this point, we know that the state is actually seeking to overturn the Claremont decisions that are the foundation of a lot of the rulings that do put more onus on the state to fund education. So, I think that if you have a complete sweep and a change of party control, maybe you get a new revenue source. It is also possible that future rulings from the Supreme Court could really push the Legislature to provide more state funding. But if anything, it seems like the winds at the court are swinging in the opposite direction.
Ben Reynolds:
I think it's important, if you want to kind of equalize this ratio between the state and local contributions, for the state to provide more money. The state really limits how local governments are able to raise revenues — they are pretty much only able to raise revenues through local property taxes. This really limits local officials from finding ways to come up with additional revenues when costs are increasing.
We did see in the last budget cycle that the state faced some resource limitations, partially because of past decisions to reduce state tax revenue. The final repeal of the interest and dividends tax took effect in the last budget cycle. We also saw that there were higher costs to maintain existing services. So if the state, in this upcoming budget cycle, wanted to provide more money to local governments, then they're going to have to take a look at tax revenues, and the existing services that they want to fund as well.
Madeline Randall:
What would be your advice to Granite Staters who would like to see the state make education funding a higher priority?
Anna Brown:
There are many examples that I can point to in New Hampshire where legislators have been swayed by interactions with individual voters at public hearings, at community meetings, from one-on-one emails, and so at Citizens Count, we really do always encourage folks to be connected with their legislators.
Our advocacy toolkit on our website has some tips — for example, how to attend a public hearing, how to write a letter to a legislator — and I would say it's really important to highlight the personal stories and personal impacts that you are seeing in your life, because — even though we love the work of the N.H. Fiscal Policy Institute and it's so important to have that real data — it's also true that legislators are human, and they're going to connect with those stories a lot.
I think that we also need to be ready to have a complex conversation. There's no easy silver-bullet solution to how education, let alone education funding, has been changing and is going to continue to change. So I think that we need to be working on bipartisan relationships and willingness to dig into this very sticky problem.
Ben Reynolds:
I think it's also important for Granite Staters to understand how much New Hampshire relies disproportionately on local property tax bases to fund all kinds of public services. Depending on how they can get state aid for public education, that could significantly reduce the upward pressure of local property taxes for other aid. The state could also provide more aid for roads and bridges, for public safety or for water and wastewater infrastructure, and those would also decrease the upward pressure as well.
Madeline Randall:
Thank you Anna and Ben for joining us today.
“The State We’re In” is a weekly digital public affairs show produced by NH PBS and The Marlin Fitzwater Center for Communication at Franklin Pierce University. It is shared with partners in the Granite State News Collaborative, of which both organizations are members. For more information, visit collaborativenh.org.