NH's Latest School Funding Case

The ConVal Decision

The NH Supreme Court issued its most recent school funding decision last week in the ConVal case. The decision upheld (affirmed) Judge Ruoff’s ruling that the state underfunds its responsibility to pay for a constitutionally adequate education. By statute, the state pays approximately $4100 for the average student. Judge Ruoff found that this number should be at least $7356.01 per student. The plaintiff school districts sought $10,000 per student.

For context, the actual amount spent in NH is over $26,000 per pupil. Idaho is the lowest spending state. It’s per pupil cost is $9387. Mississippi is at $12,394. These are overall expenditures, not how much the state pays. New England’s high cost of living and high energy costs are partly responsible for the high per pupil cost. Note also, the state did not try to justify the $4100 figure at trial.

Judge Ruoff set his number as a “conservative minimum” and wrote in his order that it is likely insufficient to pay for an adequate education. He chose this approach to avoid claims that he was violating the concept of separation of powers by dictating a specific number that the legislature must fund. The majority of the NH Supreme Court found this approach (identifying the component parts and setting a minimum cost threshold) was appropriate and respectful of the different roles assigned by the state constitution to the judiciary which determines what laws mean and engages in careful fact finding versus the legislature which sets policy and makes appropriations.

Ruoff’s approach is incrementally better than other rulings that found state funding insufficient but simply “trusted” the legislature to do the right thing. NH has for decades not done the right thing when it comes to school funding. Claremont I was decided in 1993, but the first NH Supreme Court warning about unfair funding was in 1971 in a case involving Laconia schools. Remember that when Republicans complain the Court acted too hastily.

Ruoff’s approach is better than simply trusting the legislature because he started a process of detailing the component parts of a constitutionally adequate education and assigning bare minimum costs to those mandatory components. It does no good with NH legislatures to order them to include teacher health insurance as a mandatory component, for example, and then have some wise guy in the legislature assign a cost of $100 to the funding, which is only a slight exaggeration of what prior legislatures and governors have done.

ConVal almost wasn’t

Effective January 1, 2025, the NH Supreme Court adopted a new rule that requires its decisions to be supported by at least three of the five judges who sit on NH appeals. Two judges were missing from the panel when ConVal was argued in November 2024 because Chief Justice MacDonald is recused from the case and Justice Hantz Marconi is on leave. All three judges who participated in the oral argument would have had to agree on the outcome of the appeal for the matter to move forward. After January, two judges were selected to fill the empty seats indicating that the panel was not unanimous and the decision would have failed the three-judge requirement. Judging by the just published decision, if not for the three-judge requirement, the ConVal plaintiffs would have lost with Justices Donovan and Countway voting against ConVal and Justice Bassett in dissent. Ultimately, Judges Tina Nadeau and Jillian Abramson were specially appointed to sit on the case and, after considering the facts and legal arguments, voted with Bassett on the bulk of the final decision giving ConVal the win.

The Shifting Alliance Fails to Address the Issue of Compliance.

Justice Bassett wrote the majority opinion with Judges Nadeau and Abramson agreeing with him for most of the decision. The one place where Nadeau and Abramson departed from Bassett was with respect to the injunction ordered by Judge Ruoff. Judge Ruoff carefully considered the long history of the state’s lack of compliance with prior school funding orders and made his ruling effective immediately. This meant the legislature should have started planning to raise and distribute the extra monies—about half a billion dollars in additional state aid—-right away.

Justice Bassett ruled that the state should not be given a specific timeline, implicitly trusting the legislature would do their constitutional duty and comply with the new decision as soon as practical. The two substitute judges disagreed with Bassett on this point and the two justices appointed by Governor Sununu shifted over to support Bassett for this one issue.

Here’s the problem.

Bassett retires in about six weeks. Governor Ayotte has already condemned the ConVal decision. She will nominate Bassett’s replacement and maybe one for Hantz Marconi. The two Ayotte appointees will undoubtedly oppose fair school funding as the Sununu appointees do. It’s a litmus test for Sununu and Ayotte. Thus, as thankful as I am for Bassett’s clear reasoning and support of strong precedent, he pulled a punch at the wrong time. He should have supported the injunction, even though it threatened a constitutional crisis if the legislature refused to act.

The US Supreme Court did the same thing in Brown v. Board of Education in 1954 when a unanimous Supreme Court put an end to school segregation but ruled that desegregation should take effect “with all deliberate speed.” The Supreme Court didn’t get around to saying, “Integrate Now!” until 1969.

The two Sununu Justices Beef

Justices Donovan and Countway complained that although the ConVal plaintiffs challenged the state’s overall funding of a constitutionally adequate education, they actually only put on proof to challenge base adequacy ($4100) and did not challenge the other three parts of adequacy funding that are in the same statute. Those parts, called “differentiated aid,” provide additional funding for students who qualify as English language learners ($800), live in poverty ($2300) or who qualify for special education services ($2100). The Sununu justices claimed it was unfair to consider the sufficiency of the $4100 figure for base adequacy without also considering the additional differentiated aid monies appropriated by the state.

Fortunately, our legal team challenged both base adequacy and differentiated aid in our Rand case. So we’ve already answered the Sununu justices in the portion of our case yet to reach the Supreme Court.

Additionally, our legal team submitted a friend of the court amicus brief in ConVal written by John Tobin and Natalie Laflamme. They pointed out if the state was also given credit for all the differentiated aid money, the state’s average per pupil contribution for educational adequacy only increases to about $5400 per pupil, still less than Ruoff’s conservative minimum of $7356.01.

The two Sununu judges also claimed that Ruoff intruded on legislative prerogatives when he established a conservative minimum of $7356.01. Assigning legitimate costs, they say, is a legislative function not a prototypical fact finding function of a judge who hears actual evidence from competing advocates. (Snark intended.) In this regard, the three judges in the majority properly established the rule of law for NH. That is, it was and is proper for a trial judge to engage in fact finding to establish funding thresholds.

Finally, the two Sununu judges concluded there was no beef here at all because students were not harmed in the process of underfunding constitutional adequacy because local property taxpayers make up for the underfunding. The Rand team also planned for this issue in our case. Our clients are the property taxpayers who must pay for the state’s unconstitutional downshifting of the cost of adequacy. If the actual cost of adequacy is at least $7356.01 and the state pays only $4100, the local property taxpayers are harmed because it is they who make up the difference. I should add, the state’s underfunding and over reliance on local property taxes has real consequences. “New Hampshire has the 18th most regressive state and local tax system in the country. Income disparities are larger in New Hampshire after state and local taxes are collected than before,” according to the Institute on Tax and Economic Policy.

The Recusal of the Chief Justice

Chief Justice MacDonald recused himself from the ConVal case. He did not participate in the case because he was the Attorney General when it was filed. As Attorney General, MacDonald supervised the state’s defense which is led by the Attorney General. It is the “appearance of impropriety” that provides the standard for recusal. It appears improper for one person to lead the defense one day and then decide the case the next.

Justice MacDonald refused to recuse himself from the Rand case even though the Rand and ConVal claims overlap. MacDonald actually wrote the 3-1 opinion denying the challenge to NH’s statewide property tax (SWEPT) even though the SWEPT challenge was a part of the ConVal case when MacDonald was the Attorney General. (ConVal dropped the SWEPT issue ignoring our advice.)

Now, we face the anomalous situation where a recused judge will sit on a later case and have the opportunity to reverse rulings establishing the rule of law for school funding cases in NH in at least four ways.

• Both the ConVal and Rand cases challenge the sufficiency of funding $4100 for base adequacy. Will a court with three Sununu justices, including MacDonald, reverse the finding that $4100 is constitutionally insufficient?

• Both the ConVal and Rand case relied on educators and administrators to provide evidence, some of which was in the form of expert opinions. Will a court with three Sununu justices, including MacDonald, reverse the finding that it was proper for Judge Ruoff to rely on this form of evidence?

• In both case, the state challenged the authority of Judge Ruoff to rule on the component parts of adequacy and to set cost thresholds claiming that to do so violated the separation of powers doctrine. Will a court with three Sununu justices, including MacDonald, reverse the finding that judicial fact finding and setting of cost thresholds is proper?

• Finally, will a Supreme Court led by three Sununu justices accept that the Rand plaintiffs have shown they suffered direct harm because the state’s underfunding of a constitutionally adequate education causes them to pay higher local property taxes to make up for the state’s shortfall?

Judge Ruoff will issue his order in the second part of the Rand case this summer. Although they shouldn’t, the state will invariably appeal. Expect a decision from the NH Supreme Court on the Rand case about this time next year. And, not to be cheeky, we’ll likely revisit the need for a direct order to the legislature based on what the legislature does —- or does not do —- during the intervening year.

A Postscript

Before the lawyers who read this complain about the recusal issue, the Rand team only filed suit after we learned that ConVal dropped challenges to SWEPT and differentiated aid. We then moved to consolidate both cases. Chief Justice MacDonald would have been recused from a consolidated case that included the ConVal and Rand issues. ConVal and the state objected and consolidation was denied creating this two-part process for deciding legal claims that improperly allows the Chief Justice to participate in the second act.