On June 28, 2022, property tax payers from around New Hampshire sued the state in hopes of addressing the wildly different tax rates used to fund education.
You can read their filing below, as well as find other resources about this lawsuit, school funding, and property taxes in New Hampshire.
If you are looking for information on the ConVal lawsuit, click here.
Read the State’s Initial Response
The plaintiffs filed a motion seeking a preliminary injunction against the Statewide Education Property Tax (SWEPT). Some communities in the state collect more in SWEPT than they need to fund education and are able to keep the excess to reduce other local taxes. Other communities are allowed to use negative local tax rates to offset their payment of SWEPT. Both of these SWEPT avoidance tactics have previously been ruled unconstitutional by the NH Supreme Court, and if granted, the injunction would have prevented them from taking place.
Read the Motion Requesting an Injunction Read the Memo of Law Read the Statement of Undisputed Facts
Read the State’s Objection Read the Plaintiffs’ Reply to the Objection
Following the initial hearing on the SWEPT injunction request, the judge hearing the case recused himself. He owned property in Lebanon, which is a member of the Coalition Communities 2.0 who moved to intervene in the case. Following his recusal, the case was transferred to Judge David Ruoff in Rockingham County Superior Court. Justice Ruoff is also presiding over the ConVal case, and while the two cases have not been combined, he is familiar with the issues of school funding in New Hampshire.
Following another hearing, Judge Ruoff denied the request for injunction, on the grounds that issuing an injunction would cause issues for communities who had already sent out tax bills.
Read the Order Denying the Injunction
Following the denial of the injunction, the plaintiffs filed a new motion requesting partial summary judgement on the SWEPT issues of the case. Summary judgement is often granted upon request in a trial where both parties agree on the facts and the judge issues a ruling without a full trial.
Judge Ruoff’s decision denying the injunction pointed to the administrative issues that might be created with the timing of issuing an injunction, and not the merits of the plaintiffs’ arguments. The State also focused its arguments against the injunction on those same grounds. There has not been disagreements over the fact that some communities are unconstitutionally avoiding SWEPT.
Read the Plaintiffs’ Motion Requesting Partial Summary Judgement Read the Plaintiffs’ Memo of Law Read the Plaintiffs’ Statement of Undisputed Facts
Read the State’s Objection and Cross Motion Read the State’s Memo of Law Read the State’s Consolidated Statement of Material Facts
Read the PLaintiffs’ Response to the Objection Read the Plaintiffs’ Response to the State’s Statement of Material Facts
The hearing for the plaintiffs’ motion for summary judgement on SWEPT had a courtroom hearing on July 12, 2023. In the courtroom, the State had no positive defense for its unconstitutional administration of SWEPT that allowed for some municipalities to set negative local education tax rates to offset their SWEPT payments, and allowing municipalities to retain excess SWEPT revenues they collected.
During the hearing, Judge Ruoff made it clear that he felt there was no factual dispute and would be issuing a summary judgement ruling one way or the other.
Just two weeks later, on July 27, the State filed a separate motion for summary judgement on the school funding aspects of the case. In it, they argued for the narrowest possible definition of an adequate education, claiming that while services like school buses, school nurses, and even school buildings were required by the ED306 State minimum standards for public schools, because they were not part of the legislation defining an adequate education that was passed by the State Legislature they were not part of an adequate education.
The main basis of the plaintiffs’ arguments in this case, and what was argued by the plaintiffs in the ConVal trial, has been that these services are necessary to be able to provide children with a constitutionally adequate education.
Read the State’s Motion Read the State’s Memo of Law Read the State’s Statement of Undisputed Facts
The plaintiffs objected to this motion on August 28. They argue that the State’s current cost of adequacy leaves out many real world expenses, and that their burden of proof is not to prove that any amount of funding is the right amount, only that the current amount is insufficient. As part of demonstrating the latter, they point to a study done in the Pittsfield School District that shows if the district operated on a budget of just adequacy funding, they wouldn’t have enough teachers to comply with State mandates for maximum classroom size.
Read the Plaintiffs’ Objection Read the Plaintiffs’ Memo of Law Read the Plaintiffs’ Statement of Facts
In its response to the Plaintiffs’ objection, filed September 20, the State stood by its narrow definition that adequacy only covers the instructional content defined by the legislature as an “adequate education”, continuing to exclude other required costs like busses, nurses, and buildings. The State also doubled down on its argument that it does not need to prove that adequacy is sufficient to educate students and that the burden lies with the plaintiffs to prove that it is not.
Read the State’s Reply Read the State’s Consolidated Statement of Facts
On August 8, Judge Ruoff issued a stay order on the Rand trial. In his order, Ruoff wrote that he wanted to issue his rulings in the ConVal case and on the plaintiffs’ SWEPT summary judgement motion before proceeding with the Rand trial, which was originally scheduled to take place in September.
On August 10, the lawyers representing the taxpayer plaintiffs announced that they had sent a proposed settlement to the State on the SWEPT issues in the case. When they made their announcement, they had received no indication from the State on if it was going to accept or deny the proposal.
If it were accepted, the proposed settlement would have the State stop allowing negative local education tax rates on April 1, 2024, and stop allowing municipalities to retain excess SWEPT revenues on April 1, 2025.
The proposal addresses the State’s main concerns surrounding changes to SWEPT. During the hearings for the plaintiffs preliminary injunction motion, the State argued, and the judge agreed, that an injunctive order would disrupt the ongoing rate setting and tax collecting happening in the small handful of affect municipalities. By clearly laying out a timeline for change, and instituting the changes at the start of a new tax year, the proposal should satisfy those concerns.
On November 20, the court issued its ruling, granting the plaintiffs’ summary judgement motion on the SWEPT questions of the case.
The Court held that the State’s practices of allowing municipalities to retain excess SWEPT revenues and allowing negative local education tax rates to offset the payment of SWEPT were both unconstitutional, because these practices allow property owners in some municipalities to pay lower effective rates on SWEPT.
The next day, the plaintiffs filed a Motion for Judgement on pleadings, based on the court’s ruling in the ConVal School District v. State of NH case that was also decided on November 20.
In its ConVal ruling, the court found that the current base adequacy amount paid by the State was insufficient to actually educate students. Because the State does not provide sufficient funding, communities are forced to levy local education taxes instead. The plaintiffs argue that the court should grant them a partial judgement ruling that these local taxes violate the NH Constitution because they are not uniform in rate.
The State objected, arguing that the case should be stayed until a final decision has been reached in ConVal following an appeal.
Read the Motion Read the State’s Objection Read the Plaintiffs’ Reply to the Objection
A few days later, the State filed a motion to stay the SWEPT decision until the appeals process has taken place. The State claims that the NH Department of Revenue Administration has no authority to do anything with excess SWEPT revenues remitted to it, so it must hold it in an escrow account. This leads to the argument that there will be no benefit to anyone of having this money remitted if it is just going to sit in escrow.
The State also filed a motion for reconsideration, seeking for the court to make its decision final so the State can appeal the final decision to the NH Supreme Court. The plaintiffs agreed to this request, and asked that any appeal be expedited and the requirement for a transcript to be produced should be waved. However, the plaintiffs did object to the motion to stay.
Read the Motion to Stay Read the Motion to Reconsider Read the Objection to the Motion to Stay
On February 20, 2024, the court rejected the motions seeking reconsideration and a stay of the decision on SWEPT.
Following the Superior Court ruling denying the State’s motion for reconsideration, the State filed an appeal with the NH Supreme Court, which the plaintiffs objected to.
Read the State’s Notice of Appeal Read the Plaintiffs’ Objection
The plaintiffs also filed two motions seeking to have Justice Donovan and Chief Justice MacDonald recuse themselves from the case, because they both previously represented the State in school funding litigation.
Read the Donovan Recusal Motion Read the MacDonald Recusal Motion
At the same time, the group of wealthy towns (the Coalition Communities) that had intervened in the case, filed a motion to stay the court’s order until the appeals process was complete. The State filed a motion in support, and the plaintiffs again objected, on the ground that delaying the enforcement of the ruling would mean another year of harm to taxpayers.
Read the State’s Motion in Support Read the Plaintiffs’ Objection Read the List of Coalition Communities
On March 27, the New Hampshire Supreme Court accepted the State’s appeal and granted the Coalition’s motion to stay the case.
On April 25, the Superior Court ordered that its stay on the case be lifted, and scheduled a two-week trial to begin on September 30.
While the SWEPT issue of the case heads to the NH Supreme Court, that is only part of the case. The plaintiffs also argue that the amount of money the State provides for education is unconstitutionally low. While the ConVal case focused solely on base adequacy, this case argues that both base adequacy and the differentiated aid provided by the State is too low.
The State filed a motion for reconsideration seeking to delay the date of the trial, and the plaintiffs objected.
Read the State’s Motion Read the Plaintiffs’ Objection
On May 23, the Court rejected the State’s motion for reconsideration, meaning the trial will go ahead as originally scheduled.
The trial ran from September 30 to October 10, and the plaintiffs called a series of witnesses with experience working in New Hampshire schools to talk about what is required to provide an adequate education and what it costs. The State presented no evidence in defense of its current levels of adequacy aid.
At the conclusion of the trial, in lieu of lengthy closing arguments, both sides agreed to file post-trial briefs.
Read the Plaintiffs’ Brief Read the State’s Brief
Read the Plaintiffs’ Reply Brief Read the State’s Reply Brief
On August 14, the State and the Coalition Communities 2.0, who intervened in the case on the SWEPT issues filed the initial briefs in their appeal of the Superior Court’s decision. Both parties argued in defense of the current, unconstitutional administration of SWEPT where property wealthy municipalities are able to retain excess SWEPT (and pay a lower effective SWEPT rate as a result) to offset local education tax rates.
The State additionally claimed that the unincorporated places in the state, where SWEPT is avoided with negative local education tax rates, are not subject to SWEPT because they are not legally municipalities. Finally, the State argued that the Superior Court’s decision overstepped the authority of the Judiciary, and infringed upon the Legislature’s right to develop tax policy.
Read the State’s Brief Read the Coalition’s Brief
The plaintiffs filed their response on September 30, rebutting the State and the intervenors and arguing strongly that the Superior Court decision was correct based on past court precedents and the legislative history surrounding the creation of SWEPT. They focused on the fact that the current administration of SWEPT favors property owners in some communities, allowing for lower effective rates on a tax that is supposed to be “uniform in rate” for all NH property owners.
Read the State’s Reply Brief Read the Coalition’s Reply Brief
Oral arguments for the appeal were held on November 13. The taxpayer plaintiffs made a clear argument for the closing of the two unconstitutional SWEPT loopholes, while the State and Coalition Communities 2.0 argued for them to be allowed to continue.
On June 10, the NH Supreme Court issued a 3-1 decision ruling that excess SWEPT retention was not unconstitutional, with Justice Bassett dissenting. Justice Bassett joined the other three justices in unanimously holding that the use of negative local education property tax rates to offset the payment of SWEPT was unconstitutional.
The majority opinion, authored by Chief Justice MacDonald, held that SWEPT was assessed on all taxpayers at a uniform rate, and that excess SWEPT retention was a spending decision made by the legislature on what to do with the money after it had been raised. By considering it a spending decision, it does not need to align with Part II, Article 5 of the NH Constitution, which requires taxes to be levied at the same rate. That interpretation means the legislature is actively choosing to spend more education funding in the communities with the highest property values. The majority determined that the “effective rate” being paid on SWEPT was not important because they are not actually paid by rate payers.
In his dissenting opinion, Justice Bassett wrote that effective rates are the whole point of the case, and have been used by the Court in the past to invalidate a variety of tax schemes. He points to the affidavits submitted in the case by town administrators from the Coalition Communities saying that if they had to remit their excess SWEPT it would impact municipal projects like a wastewater treatment plant. Even though SWEPT revenues must be spent on education, money is fungible and having more money for schools through SEWPT means other money raised locally can be used for municipal projects. He writes:
“The majority looks past the fundamental economic reality that money is fungible, and that when communities retain excess SWEPT revenue, the local education tax rate is reduced — and the overall property tax burden for the taxpayers in those communities is likewise reduced. The “effective rate” of the SWEPT is therefore reduced. That, of course, is the purpose — and “practical effect” — of the scheme. And that is why the SWEPT scheme is untenable and violates Part II, Article 5.”
All four justices agreed that negative local education tax rates were unconstitutional because they are not “administered in a manner that is equal in valuation and uniform in rate.” Justice Bassett writes in his dissent that this conclusion is an example of effective rates being used to rule against a tax because SWEPT is still levied at the same rate, and the local education tax rate is being used to offset it, resulting in effective rates of nearly $0 per $1,000.
On June 17, the taxpayer plaintiffs filed a Motion to Reconsider specifically dealing with the Court’s decision to overturn the Superior Court’s determination that the State should be enjoined from setting negative tax rates, despite agreeing with the Superior Court’s determination that negative local tax rates were unconstitutional. The State filed an objection to that motion.
Read the Plaintiffs’ Motion Read the State’s Objection
The plaintiffs argue that by removing the injunction against the DRA, there is no real enforcement of this decision. The majority of the Court wrote that they removed the injunction to allow the Legislative and Executive branches to resolve the issue, but the plaintiffs point out that there is nothing wrong with the language of any statute that would need to be changed, just the practice of the DRA of setting negative rates.
The plaintiffs also argue that the Legislature has demonstrated a long-standing willingness to defy the orders of the Court specifically on issues relating to school funding, and say that not having an injunction in place leaves the door wide open for the legislature to continue to do nothing, leaving the taxpayer plaintiffs without a real victory because the unconstitutional practice of negative tax rates will not stop.
In a major win for public schools and property tax payers, the Superior Court issued a decision in the Rand school funding lawsuit on August 18, 2025. The Court again found that the State’s funding for education is unconstitutionally low, and that New Hampshire’s wildly varying education property tax rate violates Part II, Article 5 of the NH Constitution. Coming less than two months after the NH Supreme Court ruling in the ConVal lawsuit – which upheld the “minimum, conservative threshold” of $7,356.01 for base adequacy – this decision from Judge Ruoff in the Superior Court ruled on the insufficient funding provided by the state for special education services and the unequal property tax rates paid to cover that gap.
This ruling from Judge Ruoff differs from the ConVal ruling in two important ways. First, the Rand suit was brought by taxpayer plaintiffs, not school districts. They successfully argued that the ridiculously low levels of funding from the State result in extremely different property tax rates needed to provide an adequate education for our public-school students. For example, in FY 2023, New Castle’s school property tax rate was just $0.19 per $1,000 of value — while Brookline’s was $14.98.
Second, the Rand case attacked the levels of special education differentiated aid provided by the State, not just base adequacy. In this regard, they were again successful. At the time of filing, the State provided an additional $2,100 per student for special education services. The plaintiffs proved that evaluations alone averaged $1,667 per student — leaving almost nothing for actual services. As Judge Ruoff put it: “The math does not lie.” In 2024, local property taxes funded 83% of special education services. That same year, 40% of school districts (70 total) spent over 25% of their budgets on special education related services, up 10 districts from 2023.
During the trial, the taxpayer plaintiffs presented a stream of witnesses who spoke to the inability of school districts to educate their students with only adequacy aid, and the financial realities of running a school district and providing necessary and mandated services to students. In particular, the testimony on funding for special education, which the State clearly believes is necessary for an adequate education because it accounts for it in the adequacy formula, showed that the aid being provided by the State was insignificant when compared to the actual cost of fulfilling IEP services for students.
School Funding and Special Education Update
The Superior Court issued a strong order denying the State’s motion to reconsider the groundbreaking decision in the Rand case issued last August. The order rejected the State’s arguments that the earlier ruling lacked a connection between the claimed harm and remedy, and that the court erred in finding that local property taxes effectively become state taxes when used to make up inadequate education funding. Judge Ruoff reaffirmed that because current state education funding is constitutionally insufficient, the underfunded mandate continues to force local communities to “bridge some portion of the gap with local taxes assessed at varying rates,” and found no basis to reconsider his earlier conclusions.
What is the Coalition Communities 2.0?
Who benefits from the unconstitutional administration of SWEPT?
Hale’s Location Hebron New Castle Newington Waterville Valley
Listen to this great interview with one of the plaintiffs on why they decided to sue the state over education funding.
Watch this interview with members of the NHSFFP team and one of the lawyers on the lawsuit.