What is a stabilization grant?

There is a lot of high level discussion about education funding that does not give you all the information you need. If it was just as simple as substituting a different funding source and raising some numbers, it would have been done by now. There are a few distinct areas of contention, and you don’t have a solution after 20 years of fighting because Legislators have failed to address them separately. When they are combined, you also combine opposition and guarantee failure. Here are the three broadest areas:

  1. Stabilization grant reductions
  2. Overall level of funding
  3. Funding source

The order I have listed these is in is critical. Acworth, Charlestown, Goshen, Langdon, and Lempster have a much larger problem than not receiving enough money. They actually receive less money each year because of these grant reductions. For Charlestown, the number is around $100,000. The net effect has not been that large because Rep. Laware and I have been reasonably successful at clawing back other municipal grants and concessions to offset this over the years. That is certainly not a sustainable solution though. At some point, we need a stable formula that gives some assurance of what funding level we will receive. I am only going to talk about that issue in this article, since it is priority one.

The reason for the grant reductions goes back a long time and is based in Governor Shaheen’s and the Legislature’s response to the Claremont decision. I’m not being critical. I honestly don’t know what they could have done differently at the time. Here is a NY Times article that gives some background. Some of the themes and actions by local officials will sound awfully familiar. NY Times 1999 – A Tax Revolt Grows in NH This fight was still going on ten years later. There are some folks running for various offices today (not local as far as I know) who have tried to paint the problem as a partisan issue. If it were that simple, you would have had a solution by now. Here is a 2010 article with some names you might recognize and you might be surprised at their defense of the current system, and equally surprised at those who agree and disagree. Seacoast Online 2010 – Towns facing new donor status

So, in a nutshell, voters were overwhelmingly against donor towns. Getting rid of that system overnight would have bankrupted many towns, so the temporary stabilization grants were enacted. They are now being reduced. I and others have been fighting to keep them until a valid replacement formula that addresses disparity aid is enacted. The argument against making the grants permanent is a pretty good one. You can’t send education aid based on 2011 student populations, which is the current basis of the grant amounts. The term “ghost students” was coined. This is a compelling argument and succeeded. Still, I believe our argument is equally fair. I agree that the grants are not legally or constitutionally viable, but they should remain until a proper formulaic solution is enacted.

So, what did I do about it? During fights and negotiations with other Representatives and Senators, the opposition began to crystallize. In 2017, I sponsored a bipartisan bill (HB356) that would have given a modest increase in per student base adequacy. There was wide bipartisan opposition, but the most common objection was that the current formula is invalid and you cannot put more permanent money into it. Others refused to support anything that did not include a new funding source. That was really frustrating. The structural reality is that you do not get to the funding source conversation until you have a valid formula that can withstand a court challenge. The bill was amended to create a committee to create a new formula based on current student populations that addresses the disparity aid issue. You can read the docket at :

Docket of HB356

Click on anything that says “amendment” to see the changes to the bill.
Now we have a committee with a charge to create the new formula. We began efforts to stop the reductions while this activity was going on. I supported another bipartisan bill to stop the reductions outright until a new formula was enacted :

Bill Text – HB525

In 2018, four of us filed HB1814. This created supplemental grants to towns whose effect would be to negate the grant reductions. We were trying to overcome irrational objections to ending or pausing the grant reductions. It seemed reasonable, but was unanimously rejected by House Finance. The bill is here Bill Text – HB1814, and contains the specific amounts that our towns are losing. That will be a real eye opener to many.
The study committee that resulted from from my bill that I mentioned earlier, HB356 produced a report and a method for eliminating the funding reductions based on current student populations. All of that committee’s documents are at Committee to Study Education Funding and the Cost of an Opportunity for an Adequate Education The proposed formula would have restored almost all of our towns’ lost funding and created a sustainable formula going forward. The resulting bill was HB709 which I sponsored with members of both parties including Senator Hennessey. It was cut up and amended during the process, but still had the new formula and restored funding, so it was worth supporting. It was killed in House Finance unanimously. What you got instead, was a commission to redo this work, with a $500,000 allocation to do it. The promise was that this commission would do its work quickly and you would have an even better solution in a year. Instead, there is no solution and a bill has been filed to extend the deadline to next year, after the deadline for filing budget bills, which means you are now four years away from action on any product of this commission. Bill Text – SB558
Now you’re up to speed. I bring this to you now because one positive of the withdrawal fight is that voters are paying attention and getting involved. While all of the fights over the years mentioned above were occurring, the public here was pretty quiet. There are a lot of things that I can do on my own, but this is one subject where I need your support. I need you to back me up. Legislators have let perfect prevent progress. They mixed issues instead of keeping it simple. There is no greater to our towns’ financial stability than these grant reductions. When we get another chance at this, which is next year, please get involved and write a letter, send an email, go to a hearing. It is a small effort that will make a big difference and help me keep my colleagues from kicking the can down a road that never ends…. again.


About Rep. Steven Smith

Steven Smith is a member of the New Hampshire House of Representatives, serving his 7th term. Rep. Smith currently represents Charlestown, Newport, and Unity. Rep. Smith is the Deputy Speaker of the NH House.
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4 Responses to What is a stabilization grant?

  1. Dennis McClary says:

    Hi Steve. Your post is well written and informative. It is indeed heartbreaking to see townspeople at each others throats over a problem they feel they did not create or control. The Fall Mountain School District is doubly challenged with its unique and difficult to understand property tax formula.
    Contrary to what we may think, NH’s school funding tax is and has always been under our control because we elect our state government. For many years elected officials have encouraged us to vote against our own best interests when they insist we elect those who take “The Pledge” not to implement a state wide school tax based on each individual’s income level and wealth versus on property alone. There should be a state wide funding source which provides equally to each student in NH. There should be no such thing as donor towns.
    For scores of years our Democrat and our Republican governors have taken the Pledge resulting in limited options for solutions. Our present regressive property tax drives many elderly and low income families from their homes each year. Ask any town tax collector what group of people most often lose their homes for taxes.
    I recently stated my opinions on income and wealth tax to a state rep. The rep, not you for the record, appeared to listen and then replied that any additional tax no matter how ear marked, would soon be spent on non-education needs and serve only to drive up over all individual taxes. I responded this appears to me to be a lack of legislative discipline and a lack of leadership.
    According to the historian Doris Kearns Goodwin in her book Team Of Rivals, when searching for solutions President Lincoln would on occasion ask his cabinet members to each present their arguments for a solution to a particular dilemma. He would then ask them to consider one of the presented ideas different from their own and prepare a written argument supporting that opposing solution. He too participated in this exercise and was sometimes persuaded the opposing or different idea was superior. Partisan ideology must be replaced with long term, pragmatic problem solving. This will happen only through courageous leadership. It’s all about leadership.

    Dennis McClary
    Langdon NH mcclarydmc@gmail.com

    • This is why the formula must be passed separately from the funding fight. Once the new formula is passed, the state has to pay for it, which changes the dynamic. The formula we worked out would have restored almost all of Langdon’s lost funding. Then, a capital gains tax was amended onto it and that is all that was debated thereafter. I have never been more frustrated. The new sport betting revenue is over performing expectations and we had an approximate 300 million dollar surplus. There was plenty of money to pay for the relief, but now they’ve chosen a path that puts you another 4 years away from change. If I’m fortunate enough to go back next year, this formula will be filed again. We really need local involvement though. We need letters, emails, calls, etc. That did not happen this time.

  2. Pingback: Here We Go Again | NH State Representative Steven Smith

  3. Pingback: Education Funding Bills | NH State Representative Steven Smith

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