APPORTIONMENT COMMITTEE

On March 9, 1999, the voters of the district approved an article that stated that:

The School Board, subsequent to the adoption of the education funding plan by the State of New Hampshire, shall study all three funding formulas for apportioning of capital outlays and operations of the cooperative school district pursuant to RSA 195:7, including under option three that all costs be apportioned on a per student basis, then hold a pubic hearing to discuss its findings and to seek public response.

In May the Governor signed HB117 which is the legislation that resolved the educational funding crisis. The School Board formed a committee as recommended by the article at its August 4, 1999 meeting. The committee is comprised of the School Board Representatives from each of the three communities: Drew Christie for Durham, John Collins from Lee, and Joan Valentine from Madbury. The Superintendent served as technical advisor to the committee.

The committee met on August 9, September 8, September 13, and September 29. The committee also met with the selectmen/town councilors for the three communities in October and November. At the November meeting it was decided that the public forum would be held on January 20, 2000.

The committee began its work by reviewing the work of the Oyster River School Board Finance Committee that studied the same topic in 1992. It also reviewed apportionment formulas for the other cooperative districts in New Hampshire. The committee's main task was to examine the tax impact of the apportionment options allowed under RSA 195:7. These are:

1. All costs shall be apportioned on the basis of the ratio that the equalized valuation of each preexisting district bears to that of the cooperative district.

2. One-half of all costs shall be apportioned on the basis of the ratio that the equalized valuation of each preexisting district bears to that of the cooperative, and half shall be apportioned on the average daily membership for the preceding year.

3. Some other formula offered by the cooperative school board with the board's recommendation, adopted by the cooperative school district and approved by the State Board of Education.

Oyster River currently apportions costs using option (b); this has been the case since the cooperative was formed. Using this formula Durham currently pays 52% of the costs, Lee pays 34% and Madbury 13%. These percentages have been fairly constant over the past ten years with a slight decrease in Durham's share and a slight increase in Lee's share. While the equalized valuation and average daily membership (ADM) vary from year to year, these changes tend to be small and have not created major shifts in the apportionment formula over the past ten years.

After much discussion the committee decided that the most effective way to analyze the various options was to determine the tax impact of each on the three communities. To determine these tax rates we used the most current data, the 1999-2000 school budget, 97-98 ADM figures, and 1997 equalized valuations. The three options the committee examined were (1) assessing costs based completely on equalized valuations (100% Eq. Val.), (2) assessing costs based 50% on enrollment and 50% on equalized valuation (50%/50%), and (3) assessing costs based completely on enrollment (100% ADM). The table below shows the resulting assessed tax rates under each of these options.

Because each of the three towns assesses property at a different rate, it is very difficult to compare assessed tax rates. Currently Durham assesses property at approximately 86% of fair market value (this is why the State Property Tax of 6.60 is assessed at $7.64 in Durham), Lee assesses at 108% and Madbury at 96%. When these percentages are applied to the assessed tax rates we arrive at an equalized tax rate. These equalized tax rates allow for comparisons between communities. Table 2 shows the equalized tax rates for each of the three apportionment options.

What does this mean to the taxpayer? A house with a fair market value of $200,000 would be assessed for $172,780 in Durham and pay $2,640 in local school property tax. The same house would be assessed for $216,400 in Lee and would pay $2,733 in local school property tax. Finally that same house in Madbury would be assessed for $191,580 and pay $2,732 in local property tax. It can be argued that the process of equalizing property values and tax rates is flawed. However, it is the best method we currently have for comparing different communities. It is also more reliable when comparing similar communities such as ours than when comparing communities across the entire state.

The balance in equalized tax rates outlined above is brought about through the distribution of State Education Funds resulting from the settlement of Claremont II. Because the distribution of funds to cooperative districts is being reviewed at the state level by both the Adequate Education Financing Commission and the Tax Equity and Efficiency Commission the Committee cannot predict how long the current funding balance will last. Other factors considered by the Committee were the ongoing court case (Gordon Allen, et al. V. State of New Hampshire) which challenges cooperative school district funding formulas and a current statute which states that once the apportionment formula for a cooperative is changed it cannot be altered again for a period of five (5) years (RSA 195:8).

THE COMMITTEE'S RECOMMENDATION

While we know that no formula will ever result in absolute equity among the three communities, the committee believes that given the current circumstances the best course of action is to continue to use the existing apportionment formula. As was noted at the January 20, 2000 public hearing, this is an issue that needs to be monitored. As variables change the Board and administration need to review the impact on the apportionment formula but for now the committee recommends no change.

Last update on 22-Feb-00 at 11:07 PM.

http://www.orol.org/district/elections/2000/report/apportionment.html

This page is edited by David K. Taylor. Please send questions or comments to editor@orol.org.