Concord, N.H. – Property taxpayers now fund more than seven out of every ten dollars spent on New Hampshire’s public schools, while New Hampshire ranks last in the nation for the share of public education revenue provided through State funding, according to a new analysis from the New Hampshire Fiscal Policy Institute.

NHFPI Senior Policy Analyst Ben Reynolds examined State Fiscal Year 2027 education aid estimates and other publicly available State and federal data to examine how New Hampshire’s education funding formula distributes aid among municipalities. The analysis focuses on the roles of student enrollment, student needs, local property wealth, and the Statewide Education Property Tax, while also examining long-term trends in how public education is financed in New Hampshire.

The analysis finds that the State’s share of school funding has steadily declined over time, while local property taxes have become an increasingly important source of education funding. Since the 2007–2008 school year, the share of school revenue provided through State funding has fallen from 34.9 percent to 25.6 percent, while the share provided through local property taxes has grown from 54.1 percent to 63.5 percent. Today, property taxes account for approximately 72 percent of all public school district revenue, when the locally collected and retained Statewide Education Property Tax is included.

The analysis also examines why State education aid varies widely from one community to another. It finds that differences in State education aid are driven by several factors, including the number of students who live in a community, the share of students with additional educational needs, local taxable property wealth, and the amount generated through the Statewide Education Property Tax. As a result, communities with larger student populations, greater student needs, or lower property wealth are generally more likely to receive additional State aid beyond the Statewide Education Property Tax.

“Education funding shapes the opportunities available to students, the future of New Hampshire’s workforce, the property taxes paid by residents, and the financial capacities of communities across New Hampshire,” said Ben Reynolds, Senior Policy Analyst at NHFPI and author of the analysis. “Understanding how the current funding formula works is essential for anyone who wants to engage in discussions about education policy and the future of public education in our state.”

The analysis explains that the education funding formula begins by calculating funding based on the number of students who live in each municipality and provides additional funding for students eligible for free or reduced-price meals, students receiving special education services, and English language learners. It then accounts for revenue generated through the Statewide Education Property Tax and provides additional State funding to eligible communities through Adequacy Grants and other targeted assistance. As a result, communities with larger student populations, greater student needs, or lower taxable property wealth generally receive more State aid than communities with smaller student populations or greater local property wealth.

The analysis also explains how Statewide Education Property Tax affects the way State education aid is reported. Although the Statewide Education Property Tax is counted as State education aid, the tax is raised and retained locally. As a result, communities with relatively high property values and few students may appear to receive high levels of State aid, but that additional funding comes from locally-generated property tax revenue.

The analysis is intended to help policymakers, local officials, educators, and Granite State residents better understand the mechanics of New Hampshire’s education funding formula as discussions continue about the State’s constitutional responsibility to fund an adequate education.

Read the issue brief, Why State Adequate Education Aid Varies by Community, and the companion fact sheet, How Education Funding is Paid For and Calculated in New Hampshire, on NHFPI’s website.

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About the New Hampshire Fiscal Policy Institute

The New Hampshire Fiscal Policy Institute is a nonpartisan, independent research organization that examines issues related to the state budget, the economy, policy decisions, and the financial security of Granite Staters, centering on issues relevant to people and families with low and moderate incomes. Learn more at www.nhfpi.org.