Town Challenges to School Tax Formula Fails

The Winnacunnet Cooperative School District (WCSD) was formed in 1957. Since then, its member towns have been Seabrook, Hampton, Hampton Falls and North Hampton. When it was formed, the statutes governing apportionment of costs among member towns required that school district capital costs be allocated according to a formula that used equalized valuation of town property as its basis. Apportionment of school district operating costs could similarly be allocated according to equalized valuation, or operating costs could be based on a formula that used both equalized valuation and average daily pupil membership. At its first organizational meeting, the voters of the WCSD chose to allocate operating costs pursuant to the equalized valuation/pupil membership formula. Thus, since 1957, WCSD has allocated capital costs among its constituents according to an equalized valuation formula, and operating costs have been allocated according to a formula based on equalized valuation and pupil membership.

In 1959, the legislature amended the statutes governing apportionment of capital and operating costs (RSA 195) to give cooperative school districts the option of allocating capital costs according to equalized valuation or based on the equalized valuation/average daily pupil membership formula. Following the 1959 amendment, the WCSD did not revise the method by which capital costs were apportioned.

In May, 2000, the Town of Seabrook refused to pay its monthly share of capital costs on the basis that the formula for apportioning the capital costs solely on the basis of equalized valuation had never been voted upon by the WCSD and, thus, had never been legally applied to the town. The WCSD petitioned the superior court for an order requiring the town to make its May 2000, payment. In response, the town maintained that the 1959 amendment required the WCSD to apportion capital and operating costs pursuant to the same formula, not two different formulas as had been the case. The superior court agreed, holding that the WCSD had failed to satisfy the requirements of RSA 195 by failing to properly adopt allocation formulas.

The Supreme Court reversed the superior court’s decision, concluding that the town had misconstrued the language of the relevant statutes. The court held that the 1959 amendment permitted a cooperative school district to allocate capital costs and operating costs pursuant to different formulas. Therefore, the WCSD was not required to choose a single formula for apportioning capital and operating costs following the 1959 amendment.