Differentiated Aid Cannot Backfill Base Adequacy: N.H. Supreme Court Strikes RSA 198:40-a, II(a), Endorses a “Conservative Minimum Threshold” (But Bars Immediate Court-Ordered Payments)

Differentiated Aid Cannot Backfill Base Adequacy: N.H. Supreme Court Strikes RSA 198:40-a, II(a), Endorses a “Conservative Minimum Threshold” (But Bars Immediate Court-Ordered Payments)

Introduction

In Contoocook Valley School District v. State, 2025 N.H. 29 (N.H. July 1, 2025), the Supreme Court of New Hampshire reaffirmed and sharpened the State’s constitutional duty under Part II, Article 83 (the Encouragement of Literature Clause) to determine the cost of, and fully fund, the opportunity for a constitutionally adequate public education for every educable child. Building upon the Claremont and Londonderry line of cases, the Court held that the State’s “base adequacy aid” (RSA 198:40-a, II(a))—$4,100 per pupil during the relevant period—fails to cover the cost of providing the opportunity for an adequate education as defined in RSA 193-E:2-a and is facially unconstitutional.

The plaintiffs, including 18 school districts (e.g., Contoocook Valley, Manchester, Nashua) and two individual school board officials, challenged only the base adequacy amount in RSA 198:40-a, II(a). After a three-week bench trial, the Superior Court declared that provision unconstitutional and crafted two remedies: (1) a “conservative minimum threshold” (CMT) of $7,356.01 per pupil that base adequacy aid must exceed, and (2) an immediate payment directive (IPD) ordering the State to make base adequacy payments at the CMT level pending legislative action. On appeal, the Supreme Court:

  • Affirmed the facial invalidation of RSA 198:40-a, II(a).
  • Approved the trial court’s use of a “conservative minimum threshold” as a guidance remedy, and affirmed the $7,356.01 calculation as supported by the record.
  • Reversed the trial court’s immediate payment directive on separation of powers grounds as an unsustainable exercise of discretion in this case’s unique posture.
  • Affirmed the admission of plaintiffs’ expert testimony and the award of reasonable attorney’s fees (with remand to consider scope given the IPD reversal).

In a critical statutory interpretation holding, the Court also ruled that plaintiffs may challenge base aid in isolation; differentiated aid under RSA 198:40-a, II(b)-(d) cannot be used to mask base aid insufficiency or be diverted to cover base costs.

Summary of the Opinion

Writing for the Court, Justice Bassett held:

  • Scope of challenge: Plaintiffs could facially challenge RSA 198:40-a, II(a) alone. The statute sets a base cost (II(a)) for students without additional needs and provides separate “differentiated aid” (II(b)-(d)) for identified student populations. Counting differentiated aid toward base costs would risk diverting those funds from their specific purposes.
  • Mixed law–fact inquiry: Determining the components and costs needed to deliver an adequate education under RSA 193-E:2-a is a mixed question of law and fact (law of the case from Contoocook Valley I, 174 N.H. 154 (2021)).
  • Expert evidence: The trial court properly admitted the testimony of Dr. Bruce Baker and Superintendent Dr. Kimberley Rizzo-Saunders under N.H. R. Evid. 702 and RSA 516:29-a.
  • Facial unconstitutionality: Plaintiffs proved a “clear and substantial conflict” between the base aid level ($4,100) and the cost of adequacy in virtually all applications; the State failed under strict scrutiny to justify the current funding level.
  • Remedies:
    • Conservative Minimum Threshold (CMT). Affirmed. Based on conservative, record-supported inputs (including teachers, support staff, instructional materials, technology, professional development, facilities operation and maintenance, and transportation), the CMT is $7,356.01 per pupil—an amount the trial court expressly found still too low to be constitutionally adequate but a practical floor that base aid must exceed.
    • Immediate Payment Directive (IPD). Reversed. Although separation of powers is not an absolute bar to mandatory injunctive relief in school-funding cases, the trial court gave insufficient weight to separation of powers concerns in ordering immediate payments of an estimated $500+ million/year before the Court had ever invalidated this particular funding provision; the legislature and governor must first act.
  • Fees: Attorney’s fees were properly awarded under the substantial benefit doctrine; remand to consider scope in light of the IPD reversal.

Analysis

1) Precedents Cited and Their Influence

  • Claremont I, 138 N.H. 183 (1993) and Claremont II, 142 N.H. 462 (1997):
    • Established that Part II, Article 83 imposes a duty on the State to provide a constitutionally adequate education and to guarantee its funding.
    • Declared the right to a State-funded, constitutionally adequate education a fundamental right, triggering strict scrutiny when adequacy is denied.
  • Londonderry I, 154 N.H. 153 (2006):
    • Framed the State’s four-part obligation: define adequacy, determine cost, fund it with constitutional taxes, and ensure delivery through accountability.
    • Confirmed the judiciary’s role to supply a remedy when other branches fail to act.
  • Opinion of the Justices (Reformed Public School Financing System), 145 N.H. 474 (2000):
    • Reinforced that the State must underwrite the cost of adequacy “for each educable child,” accepting that costs may vary but adequacy must be ensured statewide.
  • Contoocook Valley I (ConVal I), 174 N.H. 154 (2021):
    • Sent the case to trial, holding the adequacy components and costs question to be mixed law and fact, unsuitable for summary judgment.
  • Akins v. Secretary of State, 154 N.H. 67 (2006); Huckins v. McSweeney, 166 N.H. 176 (2014):
    • Provided the strict scrutiny and facial challenge frameworks applied here.
  • Evidence gatekeeping authorities: RSA 516:29-a; Daubert; Kumho Tire; Stachulski; Szewczyk; Milliken.
    • Underpinned the trial court’s admission of expert testimony on cost modeling and input costing.

2) Legal Reasoning

a) Statutory interpretation: Why base aid can be challenged alone

The Court read RSA 198:40-a holistically. Subparagraph II(a) fixes the State’s per-pupil “base” cost for a student with no additional needs. Subparagraphs II(b)-(d) add “differentiated aid” for students who are low income (free/reduced lunch), English learners, or receiving special education services. The statute’s “sum total” clause in paragraph III designates the budget formula; it does not convert differentiated aid into general base funding. Counting differentiated aid to cure base insufficiency would—contrary to the statute’s structure—divert aid from the very student populations for whom the additional services are constitutionally necessary to deliver adequacy. The Court therefore permitted a facial challenge to base aid (II(a)) “in isolation.”

The Court also rejected the State’s suggestion to sweep in other statutory funds (e.g., extraordinary need grants in RSA 198:40-f). Those grants are “in addition to” aid for adequacy and do not alter the base/differentiated architecture of RSA 198:40-a.

b) Mixed question of law and fact: What does adequacy require and what does it cost?

Following ConVal I’s mandate, the trial court began with the statutory definition of adequacy in RSA 193-E:2-a (learning areas and cross-cutting skills), then made factual findings on the components necessary to deliver the opportunity for adequacy, including:

  • Teachers and reasonable student–teacher ratios reflecting that teachers can provide classroom instruction at most 75% of the day.
  • School leaders and support staff (principals, administrative assistants, guidance counselors, library/media specialists, technology coordinators, custodians, and nurses).
  • Instructional materials and technology.
  • Teacher professional development.
  • Facilities operation and maintenance.
  • Transportation.

Many of these components had previously been recognized in 2008 legislative costing work; nurses were a notable addition. The State conceded several of these categories were essential; it otherwise framed objections as legal, not evidentiary. The Supreme Court upheld the trial court’s component list and cost inputs as supported by the record.

c) Expert testimony: Reliability and relevance

The trial court admitted:

  • Dr. Bruce Baker: Authored a 2020 report for the legislative Commission to Study School Funding using an outcomes-based statistical model to estimate per-pupil costs; extrapolated to mixed-grade districts and opined ~$9,964 per pupil (excluding transportation). The Court concluded his methodology was testable, peer-reviewed, replicable, and generally accepted.
  • Dr. Kimberley Rizzo-Saunders: A superintendent with 30 years of on-the-ground experience; used an input-based methodology anchored to prior legislative work and DOE data, adjusting conservatively to real-world costs; opined ~$9,929 per pupil (excluding transportation). The Court found RSA 516:29-a’s Daubert factors of limited applicability to her experience-based testimony but concluded her approach met the reliability threshold.
  • District finance/operations witnesses: Provided primarily factual testimony about actual costs and operational realities (the State’s perfunctory challenge was deemed waived on appeal).

d) Facial challenge and strict scrutiny

To succeed facially, plaintiffs had to show a “clear and substantial conflict” between RSA 198:40-a, II(a) and Part II, Article 83 in all or virtually all applications. The trial court’s declaratory judgment calculation—using conservative components (omitting PD, facilities O&M, transportation) and conservative inputs—found base costs of $4,752.34 per pupil, compared to the statutory $4,100. The Supreme Court emphasized:

  • That number was a conservative floor; more comprehensive estimates (Baker, Rizzo-Saunders) were ~ $9,930–$9,964 per pupil (excluding transportation).
  • No district reported per-pupil expenditures below $14,000 (2021–2022), with a statewide average near $19,400; charter schools averaged >$9,000.
  • Because the State chose a uniform base amount, it must be sufficient to provide the opportunity for adequacy in every district; a “lowest possible cost” approach would leave some districts underfunded.

With plaintiffs’ initial burden met, strict scrutiny shifted the burden to the State to justify the law by a compelling interest and necessity. The State offered no affirmative evidence that the base amount sufficed, and one expert testified that costing adequacy is not feasible, undercutting the State’s position. The Court thus affirmed the facial invalidation of RSA 198:40-a, II(a).

e) Remedies: Conservative Minimum Threshold affirmed; Immediate Payment reversed

The Court addressed two distinct remedial rulings:

  • Conservative Minimum Threshold (CMT): Affirmed. The trial court added the omitted adequacy components—teacher professional development, facilities operation and maintenance, and transportation—to its prior calculation and adjusted student–teacher ratios to reflect the 75% instructional day and real-world scheduling, producing a CMT of $7,356.01 per pupil. The Court found this supported by the record. Importantly, the CMT is a guidepost if the State retains the current funding architecture; it does not foreclose entirely different legislative solutions so long as they fund adequacy.
  • Immediate Payment Directive (IPD): Reversed. The Court explicitly rejected a categorical separation-of-powers bar to mandatory injunctive relief in school-funding cases. But it held that, in this case, the trial court gave insufficient weight to separation-of-powers implications when ordering an immediate, large-scale mandatory spending change (estimated >$500M/year) at the first instance of invalidating this particular base aid provision. The Court emphasized that appropriations and expenditures are core legislative and executive functions and directed those branches to act expeditiously to cure the deficiency.

f) Attorney’s fees

The Court affirmed an award of reasonable fees under the substantial benefit doctrine. Because it reversed only the IPD, it remanded for the trial court to consider whether the plaintiffs are entitled to fees for all issues claimed.

3) The Opinions Concurring/Dissenting

  • Justices Countway and Donovan concurred in reversing the IPD but dissented from the remainder:
    • Would require analyzing RSA 198:40-a as a whole (base plus differentiated aid) and reject a challenge to II(a) in isolation.
    • Viewed the CMT as an impermissible judicial intrusion into legislative policymaking (e.g., substituting judicial student–teacher ratios for regulatory class size standards) and as a supervisory guideline that violates separation of powers.
    • Concluded irreparable harm was not shown because districts spend far above $10,000 per pupil.
  • Retired Judges Nadeau and Abramson (specially assigned) concurred in all holdings except the IPD reversal:
    • Argued that decades of legislative inaction on school funding justify strong remedial orders; separation of powers is not a bar where the State fails to vindicate a fundamental right.
    • Criticized the majority for applying an “unsustainable exercise of discretion” framework to a ground not argued by the State and for re-weighing equities; would have affirmed the IPD as a necessary judicial remedy, akin to redistricting remedies when legislatures fail to act.

4) Impact and Forward-Looking Considerations

  • Funding architecture: The Legislature cannot rely on differentiated aid to make base aid constitutional. Base aid must exceed the CMT floor if the current scheme is retained. If the Legislature adopts a new model, it must still fully fund adequacy statewide.
  • Costing discipline: This case legitimizes both input-based and outcomes-based costing evidence. Future litigation will likely expect districts or the State to present transparent, replicable methodologies with clear links to the statutory definition of adequacy.
  • Remedial design: The Court endorsed a “guidepost” CMT as consistent with separation of powers, while reserving mandatory payment orders for circumstances where equities and history justify stronger judicial intervention. Legislative action speed now matters.
  • Budgetary stakes: Although no immediate payments were ordered, base aid cannot remain at the declared unconstitutional level. The opinion anticipates expeditious legislative and executive action; failure to act risks renewed judicial involvement and potentially stricter remedies.
  • Local taxation and equity: By holding that the State’s base aid is facially insufficient, the Court recognized the structural shortfall that shifts costs to local taxpayers. Legislative reform addressing base aid sufficiency should reduce constitutional pressure on local property tax backstops.
  • Separation of powers guardrails: The majority’s remedy analysis provides a blueprint: courts may identify constitutional floors and provide guidance; mandatory spending orders may be reserved or calibrated depending on the history and posture of the specific statutory infirmity.

Complex Concepts Simplified

  • Encouragement of Literature Clause (Pt II, Art. 83): The New Hampshire constitutional provision obligating the State to “cherish” public education. Read together with Claremont, it imposes a duty to define, cost, fund, and ensure the delivery of a constitutionally adequate education.
  • Base Adequacy Aid vs. Differentiated Aid:
    • Base aid (RSA 198:40-a, II(a)) is the per-pupil funding to provide the opportunity for an adequate education to a student with no additional needs.
    • Differentiated aid (RSA 198:40-a, II(b)-(d)) supplies additional funding for students who are low income, English learners, or receive special education, to ensure they too have the opportunity for adequacy.
  • ADMR (Average Daily Membership in Residence): The count of students used to calculate per-pupil funding; distinct from ADMA (attendance).
  • Facial challenge: An attack on a statute asserting it is unconstitutional in all, or virtually all, applications—here, that base aid at $4,100 is broadly insufficient.
  • Strict scrutiny: When a law burdens a fundamental right (such as the State-funded adequate education), the State must show a compelling interest and that the law is necessary to achieve it. The State failed to justify the base aid level under this test.
  • Mixed question of law and fact: The legal definition of adequacy comes from statute (RSA 193-E:2-a), but what resources are needed to deliver it—and at what cost—requires factual findings.
  • Daubert/Kumho and RSA 516:29-a: The reliability standards for admitting expert testimony. Scientific models (like outcomes-based costing) are tested for replicability, peer review, and error rates; experience-based educational budgeting testimony can qualify even if these factors are less applicable.
  • Conservative Minimum Threshold (CMT): A judicially derived, record-supported “floor” that base aid must exceed under the existing scheme, used as a guidepost rather than a definitive funding mandate.
  • Immediate Payment Directive (IPD): A mandatory injunction ordering immediate increased payments. The Court reversed the IPD here as an unsustainable exercise of discretion under the unique posture of this particular statute’s first invalidation.

Conclusion

Contoocook Valley School District v. State decisively reinforces New Hampshire’s constitutional command: the State must define, cost, and fully fund the opportunity for a constitutionally adequate education. The Court’s most consequential holdings are twofold. First, base adequacy aid must stand on its own—differentiated aid cannot be used to plug holes in the base. Second, while the judiciary will avoid micromanaging education finance, it can identify a conservative constitutional floor and set remedial guideposts without invading core legislative functions.

The Legislature and Governor are now “duty bound” to cure the constitutional deficiency. Although the Court withheld a mandatory payment order in this first instance of invalidating RSA 198:40-a, II(a), it underscored that constitutional deference has limits. With the State’s base aid deemed facially unconstitutional and a conservative minimum threshold validated, the political branches must act swiftly to ensure that every educable child in New Hampshire truly receives a State-funded opportunity for a constitutionally adequate education.

Case Details

Year: 2025
Court: Supreme Court of New Hampshire

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