NH Tries to its Cap Local School Budgets

by Ethan DeWitt, New Hampshire Bulletin
March 14, 2025

The New Hampshire House passed a bill that would set automatic budget caps for all New Hampshire school districts, sparking intense debate over local control and local property taxes.

House Bill 675, which passed 190-185, would require that all school districts in the state cap their spending according to a specific formula. If residents wanted to override that spending cap, they would need to do so with a two-thirds majority vote.

Under the bill, for the first two years of implementation — from July 1, 2025, to June 30, 2027 — school districts would have their budgets capped at the previous year’s spending level multiplied by the average inflation rate of the previous five years.

Then, after June 30, 2027, districts would have to set their budgets at either the average budget level of the previous five years or the previous year’s budget level multiplied by the average percentage change in the number of students over the past five years — whichever is greater. That formula means if a district lost students from one year to the next, it could still set its budget at similar levels to the past five years, but if the district gained students over a five-year period, it could increase its budget.

Proponents said the legislation would help address rising property taxes. “School budgets, and thus property taxes, have been growing way out of proportion,” wrote Rep. Dan McGuire, an Epsom Republican, in an explanation in the House calendar.

McGuire also argued that there is “no correlation” between school spending and student outcomes.

But Democrats and other opponents countered that the bill would erode local control over budgets. Rep. Hope Damon, a Croydon Democrat, called it an “arbitrary sledgehammer” that would cause “irreparable harm.”

“Along with completely overriding local school districts’ control over their budgets, this legislation perpetuates the existing and very significant funding inequities between districts,” Damon said.

And they pointed out that voters in school districts already have a mechanism to put a budget cap in place: Under a bill that passed in 2024, voters may vote at town meeting to install a cap, but must do so by a three-fifths majority to be successful.

This week, residents in seven towns attempted to set such budget caps at town meetings; all seven measures failed, according to NHPR.

Democrats pointed to those failures as evidence that voters do not want the budget caps, and said the Legislature should not force school districts to adopt them.

The bill has moved on to the House Finance Committee for further review; it must pass the full House again before moving on to the Senate.

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Ethan DeWitt is the New Hampshire Bulletin’s education reporter. Previously, he worked as the New Hampshire State House reporter for the Concord Monitor, covering the state, the Legislature, and the New Hampshire presidential primary. A Westmoreland native, Ethan started his career as the politics and health care reporter at the Keene Sentinel. Email: edewitt@newhampshirebulletin.com

New Hampshire Bulletin is part of States Newsroom, the nation’s largest state-focused nonprofit news organization.