Rural New Hampshire school district considers hiring collection agency for student lunch debt - Lessons in NH school funding

A couple of weeks ago, Claremont, New Hampshire's school district announced that they were considering a plan to hire collection agency to collect nearly $32,000 in delinquent lunch fees.  This move, said by school leaders to be needed due to fiscal concerns, is interesting because it brings to mind the funding issues that Claremont has faced over the years and their attempts to get the State of New Hampshire to remedy them. New Hampshire school funding is a tricky issue. They are the only state to lack both an income and sales tax, which creates an incredible reliance on property tax as a means of financing state and local functions. Within this framework, Claremont finds itself in a precarious situation. It is property poor, meaning that its taxable property is not worth very much. It also has a poverty rate that is almost double that of the State of New Hampshire more broadly. What this means is that Claremont has a relatively small local tax base, so it does not have much money to draw upon to fund its local schools, and an economically vulnerable population, who also live on the margins and for whom bringing in a collection agency may create more problems than it solves. Understanding why this story is significant and why Claremont may opt to attempt to recoup the money requires an understanding of the myriad of challenges that Claremont (and communities like it) have faced in attempting to achieve access to equitable school funding.

Here's some background: In 1989, Claremont's school district found itself in dire straits. Its funding issues had created a cascading waterfall that had a detrimental impact on its ability to provide a quality education for its students. They had been forced to make severe education cutbacks, its school buildings were in a state of disrepair, and their high school had even come close to losing accreditation. Facing these circumstances and with the hopes of compelling them to provide more funding to the district, the school board and its chairman decided to explore a litigation strategy against the State of New Hampshire. In June 1991, the Claremont School District (and various co-petitioners from around the state) filed their lawsuit.

In their initial decision, commonly known as Claremont I, the New Hampshire Supreme Court held that "[The New Hampshire Constitution] imposes a duty on the State to provide a constitutionally adequate education to every educable child in the public schools in New Hampshire and to guarantee adequate funding" and in remanding the case to the lower court placed the onus on the Governor and State Legislature to come up with a means of guaranteeing this.

When the case was reheard by the NH Supreme Court in 1997, it was held that New Hampshire's scheme of school funding violated the state's constitution, in particular the duty outlined in Claremont I. In their holding, the court clarified that the state's duty to provide a "constitutionally adequate education" extended beyond core subjects and had to be mobile to the changing demands of society. In particular, they said:

"[It] is not the needs of the few but the critical requirements of the many that it must address. Mere competence in the basics — reading, writing, and arithmetic — is insufficient in the waning days of the twentieth century to insure that this State’s public school students are fully integrated into the world around them. A broad exposure to the social, economic, scientific, technological, and political realities of today’s society is essential for our students to compete, contribute, and flourish in the twenty-first century." 

The Court also held that the state had to have a role in funding an "adequate" education and could not simply delegate this to towns. Since the Claremont decisions, New Hampshire has toyed with various schemes of supplementing funding local funding for schools with none of them being particularly successful at fully bridging the achievement gap between high income and low income school districts.

To further complicate things, there is also evidence that New Hampshire's school funding scheme is starting to resemble what it was before the Claremont decisions. In the immediate aftermath of Claremont II, state revenues made up the majority of the local school funding. In 2000-2001, for example, local taxes made up only 40.4% of school revenue. However, local tax revenues now make up the majority of local funding for schools in New Hampshire and this is an increasing trend. In 2013-2014, local taxes made up 57.7% of education funding and by 2016-2017, this had increased to 67.5%. This increasing percentage is the result of a series of policy decisions by the New Hampshire legislature. In order to attempt to bridge this gap, property poor districts are having to increase their tax rates in order to attempt to raise sufficient revenue to fund their schools. For example, Lebanon, a more affluent district 20 miles north, has a property tax rate that is 60% that of Claremont's. The people who can least afford to pay higher taxes are being asked to do so.

Given the history of Claremont's issues with school funding, it is perhaps easy to understand why they may feel that they have to take drastic steps recoup thousands of dollars in lost revenue. After all, when you are operating on the margins, every little bit counts. However, Claremont is in its situation because its residents are low-income and largely economically vulnerable, conditions that hiring a collection agency may only serve to exacerbate. After all, having an account in collections may adversely impact their ability to secure a loan to buy a car, a necessity in rural New Hampshire, or result in them paying a substantially higher interest rate than they may otherwise have, which could cost them thousands of dollars. The practical effects of this are obvious. If a person can't get a car, they won't be able to work and if a person has to pay a higher interest rate, they lose money that they could have used to feed their family or provide other essentials. This line of logic also applies if a person needs to access an emergency line of credit for pay for an unexpected repair or any other unforeseen circumstance. This is not an easy situation for anyone involved but getting a collection agency involved seems as though it would create societal problems whose value exceeds the money that the city would recoup.