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NH communities explore re-forming coalition opposing ‘donor town’ model for education funding

Valley News Staff Writer
Published: 1/10/2021 8:55:30 PM
Modified: 1/10/2021 8:55:11 PM

LEBANON — A group of communities who fear a return to New Hampshire’s “donor town” system of education funding is moving to re-form a coalition that opposed past efforts to funnel money from property-rich municipalities to their less-fortunate neighbors.

Under a proposal put forward by the city of Portsmouth, the Coalition Communities would pool money for a lobbyist and other “related experts” to advocate on their behalf at the Statehouse, according to Lebanon City Manager Shaun Mulholland.

He said Portsmouth officials are now working to craft a memorandum of understanding to govern the coalition, which once boasted 34 members, including Grantham, Hanover, New London and Sunapee.

The memorandum will be presented to the Lebanon City Council, which will decide whether to join the reconstituted group during its Feb. 3 meeting, Mulholland said, adding that the coalition’s goals aren’t yet finalized.

“I am not familiar with the work the coalition did in the early part of this century,” he said in an email. “I am still trying to educate myself on the issue.”

Hanover also was asked to join, according to Hanover Town Manager Julia Griffin, who declined the request.

“We were not heavily involved with the Coalition when it was last active, and I just do not have any spare funds in my budget to pay for our share of hiring a lobbyist,” she said in an email last week.

Efforts to reform the coalition come on the heels of a 181-page report released last year that found New Hampshire’s education funding system “inequitable from both student and taxpayer perspectives.”

The report — the result of a year-long effort by the Legislature’s Commission to Study School Funding — took particular issue with the state’s reliance on local property taxes and the Statewide Education Property Tax to fund schools.

Under the statewide tax, education aid raised to support schools remains within a given school district, with any excess funds collected returned by the state.

That means property-rich towns — such as Lebanon, Hanover and Portsmouth — often don’t use up all of the state property taxes they pay and receive large amounts back. Meanwhile, property-poor towns use up all of that tax revenue and frequently have to raise taxes or cut teachers and services.

In its report, the Commission recommended redistributing the statewide taxes so that excess funds from wealthier towns are passed along to those with fewer resources, similar to the so-called “donor town” system that existed prior to 2011.

However, doing so could cost some communities millions of dollars. The commission estimates that Hanover would send about $13.4 million to less-fortunate towns, while Lebanon would send roughly $4.7 million.

Claremont, which has the highest tax rate in the state and frequently struggles to fund its schools, would see $24 million in new funds, under the proposal.

Lebanon Mayor Tim McNamara said he hasn’t read the full report but called the numbers “disturbing” during a phone interview last week.

McNamara said he supports a statewide program to pay for education but “I just don’t think the property tax is the appropriate way to distribute this load.”

During its first iteration, the Coalition Communities offered similar arguments, saying their tax dollars were being unfairly distributed to other communities without adequately helping the neediest. Some experts, however, saw that stance as a cover used to avoid a higher tax burden.

“It’s what I see as preserving what I call an elitist status quo where you’ve got 20% of the communities, because they have money, having their way at the disadvantage of 80% of the communities in the state,” said Claremont School Board Chairman Frank Sprague.

Sprague has his own ideas of how to reform education spending — he proposes directly taxing those whose homes benefit from state resources, such as lake or mountain views — but he’s clear that communities such as Lebanon can and should be doing more.

“It isn’t as much as what your taxes are as your ability to pay them,” he said, pointing to Lebanon’s $67,68 median household income as compared to Claremont’s $47,649.

Other officials pointed out that the Coalition Communities could split towns and cities that have traditionally allied in calling for educating funding reform.

For instance, Lebanon lawmakers sided with those in Claremont during a 2008 vote against a Coalition Communities-approved constitutional amendment to do away with the donor system and instead “target” aid to what were considered the neediest school districts.

Vocal opposition to the measure — supported by then-Gov. John Lynch — resulted in former Lebanon Rep. Lee Hammond resigning as vice chairman of the House Legislative Administration Committee.

Rep. Susan Almy, D-Lebanon, said last week that she also took flak from party leadership over her refusal to back the amendment, as did former State Sen. Clifton Below, D-Lebanon, who was at the time serving as a Public Utilities Commissioner.

“Historically, it’s the strength of the donor towns that caused the Legislature to continue to undervalue the state’s obligation to fund education,” said Below, who is now Lebanon’s assistant mayor.

Below said he’s unlikely to support Lebanon joining the coalition when it comes up for a vote next month.

“It just brings back all these old wounds and arguments,” he said.

Tim Camerato can be reached at or 603-727-3223.

Valley News

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