Dartmouth College Library Bulletin

New Hampshire's Proportion of Public Taxes:

Its Role in Public School Funding:



THE first published act for assessing New Hampshire towns in proportion to their valuation, to meet a specific fiscal need shared by all of them, is dated 5 August 1693. l Its goal of 200 pounds was "for Supporte of the Governem't In repaireing ffortifications & for reimburseing of the Treasurey" of the Province of New Hampshire, and involved but five towns: Portsmouth, New Castle, Hampton, Dover, and Exeter. Other lists of towns with their proportionate obligations for paying the various bills of the province followed more or less regularly over the years. But not until 1 June 1728 did the list first take on the general significance of an assessment guide for raising pounds1000 of province tax, whatever the reason and full amount needed, rather than being just a bill for a particular expense. After that, through the transition from province to state, such lists were a routine part of the normal statutory output with each the subject of an updated "Act for Establishing a New Proportion of the Public Taxes" in which dollars replaced pounds after 1794. Effective at first for four years (with minor irregularities), beginning in 1913 they were revised biennially. The last one seems to have been published in 1965 even though the traditional state tax had apparently given way to one on tobacco in 1939. As a general source, however, they ought to serve for more than just recalculating old tax bills. They also offer easily-accessible and finely-tuned disclosures of the always changing relative wealth standings among the towns of the province or state and, in principle, of absolute wealth levels, as well, once any town's is known. Perhaps those scholars tracking economic, demographic, stylistic, or other historical changes within the state might find use for them, too.

A town's standing on one of these lists--or its share of the 1,000 pounds/dollars unit of public-tax obligation--reflected the monetary value of its annual inventory of polls and ratable estates. Taking any town's sum total of that inventory to be v, with the whole state's as V the town's proportion of public taxes, p (to assign it a symbol it never had) would be

p = ( v/V )1000 = 10[(v/V )100]

or the numerical equivalent of ten times the town's percentage share of the state's total valuation.

To set the full tax, which gave the state its operating budget, required a rate- like multiplier on p. Early in the nineteenth century, for example, the statutes show the state's annual need as $26,666.67, which meant (without its being noted explicitly by the statute writers) a multiplier of ~26.67$/$ for each town; by mid-century that had grown to an even 70. In 1862, the pressure of the Civil War jumped it from 80 to 270, and on to a peak of 750 in 1865. From there it turned down, leveled out by the mid-1870s and ended the century at 425. After a decade or so it started growing again and reached its all-time published high of 2200 in 1919, with considerable help from World War I. 2

That all of this translated into a commonly-shared tax rate is perhaps made more apparent by also identifying the multiplier symbolically, e.g. as Z . Then the definition of p might be rewritten as

p / v = 1000/ V

a state-wide constant to emphasize that each town, in fact, shared the same ratio of p to v. And after multiplying by Z, to produce

( Z*p ) /v = ( Z *1000) / V

the new constant, ( Z*p ) / v, is the common state-tax bill to each taxpayer for each pound or dollar of assessed valuation. When Z was 26.67$/$ at the turn of the century, the state tax was seventy-five cents per thousand dollars of assessed valuation.3 Although this may seem to be a roundabout way of setting a tax rate, in New Hampshire, at least, it was the natural outgrowth of a long-standing proportionate-assessment practice.

When the legislature eventually took up the mechanics of public school funding -- with the intent of creating the same kind of taxpayer obligation as that posed by the state's operating budget -- the way was already clearly marked. It was one that led directly to the revenue-generating part of the watershed education-reform act of 1789, and the only part to remain intact until the adoption of the next such act in 1919.

In the words of 1789: for school support, selectmen were "impowered and required to assess annually the Inhabitants of their respective towns, according to their polls and ratable estates, in a sum to be computed at the rate of five pounds for every twenty shillings of their proportion for public taxes for the time being and so for a greater or lesser sum," with the selectmen, in this opening year, personally liable for a town's non-compliance.4 Understanding the statute's intent today, of course, first requires understanding what was common knowledge at the time: that the "proportion for [or of] public taxes" was defined in a separate statute. 5

The old idea's application to public/common schools after 1789 naturally featured its own multiplier for p (call this new one M to keep it general, also). And together, the two factors from 1789, Mand p, defined a statutory minimum for the town's annual school tax of M x p, as that for the state was set at M * 1000 (because all p still summed to 1000 pounds/dollars). For a town to generate more tax money in any year would be its own, local decision. New Hampshire's taxpayers thus became the new nation's first to be denied the traditional option of raising school money only in amounts that they personally judged to be appropriate.

Neither M nor p were static for long; M grew erratically -- mainly by accelerating -- starting at 5 pounds/pounds; in 1789 and ending after eighteen separate legislative decisions at 750$/$ in 1905. It was different, however, for the better than two hundred individual p's from as many towns or places; these changed regularly, both up and down.6 At the same time, and as fuel for the trend in M, the assets of New Hampshire's towns became increasingly stratified so that the M * p mandates rapidly diverged, in a way perhaps best visualized as in figure I. Shown there is the legislatively-driven growth in the communal M -- increasing in overall rate more than fivefold after mid-century -- together with representative records of p for some local towns: Lebanon with stability and enough growth after 1870 that it occasionally represented more than 1% of the state's total valuation; Plainfield, a middle-class agricultural town that mostly lost ground, relatively; Grantham, a poor town that got steadily poorer after mid-century. The actual school-support floors confronting the nineteenth-century budget planners in these towns come from multiplying data points in the M and p displays as that has been done to produce the further comparisons in figure 2 (where the results for Hanover and Enfield are also brought in). Lebanon was ballooning in the end, while Grantham was barely holding its own.

Figure 1Figure 1

Figure 2Figure 2

Today, the problems that were inherent in the school-support system launched in 1789 are easy to spot. Towns of falling p, for whatever reasons (but always strongly biased by the declining hill-farm economy) became seriously under-funded if they relied wholly on the mandated tax base and did not tax themselves additionally; state aid was no more significant then than now. Others, of rising p, could end up with money that bordered on surplus, without ever thinking about further taxing themselves. And that problem became exacerbated by a legislative decision in 1805 to allow a town to divide itself into virtually independent school districts, each owning and managing its own schoolhouse. When district claimants then drew from the town's state-mandated operating budget only in proportion to their own, often wildly unequal valuations, the inequities between towns were greatly compounded in the inequities between districts. In Hanover, for example, interdistrict school- tax allotments differed, at the extreme in 1880, by as much as 60 to 1.

Finally, in 1846, the state reached beyond its traditional role of lawmaker to begin taking a hand in management as well, and did that with the appointment of Dartmouth's Professor Charles B. Haddock as its first Commissioner of Common Schools.7 A clerical and advisory position, for Professor Haddock it was also perhaps more a transition than an introduction, as he had likely worked to create that very post from his seat in the legislature for several years previously; the mid-century upsurge in M in figure I may well testify to his lobbying skills.8 Only during the Civil War and for a few years afterwards did the state raise more money for paying its own bills than it mandated for spending on its public schools. But the age that Professor Haddock introduced defies being encapsulated. Marked by increasing revenues and average wages for teaching, as well as by falling enrollment and a stagnant average length of school year, it was a time of struggling, unsuccessfully, to make a fundamentally flawed system work.

At last, in 1885, the legislature managed to reassemble its towns from their tiny educational fiefdoms -- nearly 2500 altogether in the peak year of 1860 -- and that act largely suppressed the interdistrict inequalities within the town. Yet even with what were now, technically, town-size districts, the first level of support disparity inherent in the law of 1789 remained. And in the end, reform spirit, reinforced by unnerving discoveries about the state's district-schooled citizenry during mobilization for World War I, led to the turning-point of 1919.9 After the last tie to 1789 was cut and an empowered State Board of Education given control, more than valuation limits and voluntarism began to have an effect on local school budgets. The door to the future had been opened.

1. New Hampshire. Laws, statutes, etc. Laws of New Hampshire: Including Public and Private Acts and Resolves and the Royal Commissions and Instructions, with Historical and Descriptive Notes, and an Appendix, ed. Albert Stillman Batchellor, 10 vols. (Manchester N.H.: J. B. Clarke, 1904-l922), vol. I, Province Period 1679-1702, p. 563.

2. The last year for the statutory listing of a state tax was 1938. All such data are found in the appropriate session laws.

3. Any town for which p and v are known will provide the answer. Many local town records are available: Enfield's at its public library; Plainfields and Grantham's at their town office buildings; Lebanon's at its City Hall; Hanover's in Special Collections a Dartmouth College.

4. Laws of New Hampshire, Vol. 5, First Constitutional Period 1784-1792, ed. Henn Harrison Metcalf (Concord: 1916), p. 449.

5. See pp. 24-25 ff in the only post-1919 reference that is clear about how to interpret the 1789 school- tax formula, an informally published 70-page report, State Regulation, and Funding of Public Schools in New Hampshire: from the Colonial Era to 1950, by Richard A. Wines, dated 1 June 1983; it was discovered in the files of the New Hampshire Historical Society, and a copy has since been added to the holdings of Baker Library. From before 1919, the best reference may be the 1900 Report of the Superintendent of Public Instruction (current title: New Hampshire. State Board of Education. Biennia Report). On page 266, the state superintendent instructs town officials on how to determine their minimum obligations as part of an updated local reporting practice. No useful oral-history tradition seems to have survived. Nor, apparently, has any algebra identification of the basic budget-setting factors ever been used.

6. The population of these state-wide tax centers (mostly towns) grew from 213 in 1789 to a maximum of 257 in 1899 before falling back to 253 in 1965.

7. The great local-management reform act of 1827 with its introduction of the townwide superintending school committee and the individual district's prudential committee is being bypassed here. But that had more effect on how spending was controlled than on how money was raised.

8. Professor Haddock's views on education reform are detailed in the Report of the Commissioner of Common Schools to the Legislature of New Hampshire, June Session, 1847 (another early variant title of the Board of Educations Biennial Report), the first such report to be issued by the state. His greatest concern, widely shared among reformers of his day, appears to have been with improving the schoolhouse environment by minimizing the "carbonic acid gas" (i.e., CO2) in the air space of the building; dilution by raising ceilings and ventilating was his guiding principle (see, for example, p. 14 ff in the first report and p. 15ff in the second). A huge amount of data, both interpretive and statistical, accumulates in annual installments on the heels of this report. No source better reveals the actual working of New Hampshires public school system over the difficult years of the late district era than this series of state publications.

9. "An act in amendment of the laws relating to the public schools and establishing a state board of education," effective 28 March 1919 (New Hampshire. Laws, Statutes, etc. Laws of the State of New Hampshire, 19l9, Chapter 106, pp. 155-166). In 1919, the commonly shared valuation-based school tax of the past 130 years--set anew at $3.50/thousand that year -- was reinforced with others uncoupled from taxable assets: one, to cover an assessment of $2.00/child in attendance at school the year before as the town's share of the state's expenses in supervising all public schools; another, to pay for whatever additional supplies and services the local school board judged to be necessary in the year ahead. But there was a cap on the second of these. If, in effect, the latter came to more than $1.50/thousand (or about 43% beyond the mandated $3.50/thousand), the State Board of Education was to make up the difference. However, from the state's previous half-century or so of experience with voluntary overage, that amount was probably felt to be enough to shield it from any flood of claims.