THE STATE OF NEW HAMPSHIRE

SUPREME COURT

2009-0791

City of Manchester v. Secretary of State & a.

&.

Ryan Cashin & a. v. City of Manchester

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BRIEF OF AMICUS CURIAE, NEW HAMPSHIRE SCHOOL ADMINISTRATORS ASSOCIATION

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Dean B. Eggert, Esq. Bar #742 Gregory M. Sargent, Esq. Bar #16490 Wadleigh, Starr & Peters, PLLC 95 Market Street Manchester, NH 03101 (603) 669-4140

March 10, 2010

TABLE OF CONTENTS

TABLE OF AUTHORITIES …………………………………................................iii INTEREST OF AMICUS CURIAE ………………………………………….......... 1

STATEMENT OF FACTS …………………………………………………........... 1

SUMMARY OF THE ARGUMENT …………………………………………....... 4

ARGUMENT …………………………………………………………………........ 5

I. CHARTER AMENDMENTS THAT CAP INCREASES IN

SCHOOL BUDGET PROPOSALS, ADOPTED BUDGETS, SPENDING AND TAX RATES ARE UNLAWFUL BECAUSE NEW HAMPSHIRE IS NOT A HOME RULE STATE....................5

A. The Legislature Has Not Expressly Delegated The Power To

Enact These Charter Amendments.....................................................7

1. There Is No Express Delegation Of Power To Enact These Charter Amendments in RSA 49-B, -C, or -D.............7

2. There Is No Express Delegation Of Power In RSA

49-B, -C, Or -D To Cap A School Board’s Budget Proposal, The Local School Tax Or School Spending...........8

3. There Is No Express Delegation Of Power For Requiring

A Supermajority Vote To Override The Limitations In These Amendments................................................................ 9

4. There Is No Express Delegation Of Power To Bind Future

Municipal Legislative Bodies Regarding Budgets That School Districts May Propose, And Municipalities May Enact And Fund .....................................................................10

B. The Power To Enact These Charter Amendments Is Neither Implied

By Nor Incidental To RSA 49-C:23.................................................. 11 II. CHARTER AMENDMENTS THAT CAP INCREASES IN SCHOOL DISTRICT BUDGET PROPOSALS, SPENDING AND TAX RATES ARE UNLAWFUL BECAUSE THEY CONFLICT WITH AND ARE INCONSISTENT WITH NEW HAMPSHIRE

LAW.................................................................................................. 13

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A. RSA 49-B:1 Prohibits Charter Amendments That Conflict With Or Are Inconsistent With New Hampshire Law................................ 13

B. The Caps Are Unlawful Because They Conflict With New

Hampshire Education Law................................................................ 14

1. These Charter Amendments Conflict With NH Laws Requiring School Districts To Carry Out Their Mandatory Obligations............................................................................. 14

a. These Charter Amendments Fail To Provide For

The Mandatory Obligation Imposed By RSA 186-C:13, I..................................................................15

b. These Charter Amendments Fail To Provide For

Mandatory Obligations Imposed By Federal Law..... 15 c. These Charter Amendments Fail To Provide For

Mandatory Obligations Imposed By RSA 273-A:12, Evergreen Pay...........................................17

d. These Charter Amendments Fail To Provide For

Mandatory Obligations Imposed By Pre-Existing Contracts.................................................................... 17

2. These Charter Amendments Are Inconsistent With The

Delegation Of Authority To The New Hampshire Board Of Education................................................................................18

3. These Charter Amendments Are Unlawful Because They

Are Inconsistent With The Delegation Of Budgetary Authority To Local School Boards.........................................18

C. The Caps Are Unlawful Because They Conflict With New

Hampshire Tax Law........................................................................... 19 CONCLUSION.......................................................................................................... 20 CERTIFICATE OF SERVICE...................................................................................20 REQUEST FOR ORAL ARGUMENT......................................................................20

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TABLE OF AUTHORITIES

Constitutional Provisions

N.H. CONST. Part I, Article 12……………………………………………………19

N.H. CONST. Part I, Article 28……………………………………………………19 N.H. CONST. Part I, Article 39……………………………………………………5 N.H. CONST. Part II Article 2……………………………………………………. 5, 19 N.H. CONST. Part II, Article 5…………………………………………………… 19 N.H. CONST. Part II, Article 5-b………………………………………………….19 N.H. CONST. Part II, Article 6…………………………………………………… 19 N.H. CONST. Part II, Article 83…………………………………………………. 9 Statutes 20 U.S.C. § 1400 et. seq………………………………………………………… 16 20 U.S.C. § 6301 et. Seq……………………………………………………….. 16 20 U.S.C. § 7801……………………………………………………………….. 16 20 U.S.C. § 7901……………………………………………………………….. 16 29 U.S.C. § 794 et. seq…………………………………………………………. 16 42 U.S.C. § 11431 et. seq………………………………………………………. 15 RSA 31:3……………………………………………………………………….. 10,12,17 RSA 31:41-d…………………………………………………………………… 12 RSA 31:94-b…………………………………………………………………… 12 RSA 31:100…………………………………………………………………….. 12 RSA 31:102-a………………………………………………………………….. 12 RSA 31:105…………………………………………………………………….. 12

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RSA 31:106…………………………………………………………………... 12 RSA 31:107…………………………………………………………………… 12 RSA 31:110…………………………………………………………………… 12 RSA 31:121…………………………………………………………………… 12 RSA 32:2………………………………………………………………….….. 18 RSA 32:5………………………………………………………………….….. 18 RSA 33:3………………………………………………………………….….. 10 RSA 33:7-e………………………………………………………………….... 10,17 RSA 33:8……………………………………………………………………… 9,12 RSA 33:8-c…………………………………………………………………… 9 RSA 33:8-d…………………………………………………………………… 9 RSA 33:9……………………………………………………………………… 9,12 RSA 34:1……………………………………………………………………… 12 RSA 44:10-a………………………………………………………………….. 13 RSA 47:b-1………………………………………………………………….... 13 RSA 47:11…………………………………………………………………….. 13 RSA 47:22…………………………………………………………………….. 13 RSA 47:22-a………………………………………………………………….. 13 RSA 48:18…………………………………………………………………….. 13 RSA 48:19…………………………………………………………………….. 13 RSA 49-B……………………………………………………………………... 5,6,7,8, 11,14 RSA 49-B:1………………………………………………………………….... 6,7,11, 13,14

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RSA 49-B:2………………………………………………....………............. 7 RSA 49-C…………………………………………………... ………............. 5,6,7, 8,

9, 10, 11, 14

RSA 49-C:23………………………………………………………………… 6, 7, 9,

11, 12 RSA 49-C:32………………………………………………………………… 8 RSA 49-D……………………………………………………………………. 5,6,7,8, 9,

11 RSA 49-D:2………………………………………………………………….. 8,10 RSA 49-D:3………………………………………………………………….. 7,8,10,

11,12 RSA 186:6…………………………………………………………………..... 18 RSA 186-C………………………………………………………………….... 9,16 RSA 186-C:12………………………………………………………………... 16,18 RSA 186-C:13………………………………………………………………... 15 RSA 186-C:16………………………………………………………………… 18 RSA 186-C:18………………………………………………………………… 18 RSA 189:1-a………………………………………………………………..... 9 RSA 193-E:2-a……………………………………………………………..... 9 RSA 194…………………………………………………………………….... 9 RSA 194:3………………………………………………………………….... 9 RSA 194:21…………………………………………………………………... 17 RSA 194:21-a……………………………………………………………….. 17 RSA 194:22………………………………………………………………….. 17 RSA 194-C…………………………………………………………………. . 9

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RSA 194-C:4……………………………………………………………….... 19 RSA 194-C:6……………………………………………………………….... 16 RSA 194-C:9………………………………………………………………… 19 RSA 197:5-a………………………………………………………………… 19 RSA 198……………………………………………………………………... 9 RSA 198:40-a………………………………………………………………... 9 RSA 198:40-b……………………………………………………………….. 9 RSA 198:40-c……………………………………………………………….. 9 RSA 198:40-d……………………………………………………………….. 9 RSA 198:41………………………………………………………………..... 9 RSA 198:42……………………………………………………………......... 9 RSA 198:46……………………………………………………………......... 9 RSA 273-A:3………………………………………………………………... 10 RSA 273-A:12…………………………………………………………......... 9,17 Cases Appeal of Barry, 143 N.H. 161 (1998)................................................................ 6, 16 Bell v. Arel, 123 N.H. 311 (1983) ...................................................................... 14 Blood v. Manchester Electric Light Co., 68 N.H. 340 (1895)............................ 10 Bull v. Gowing, 85 N.H. 483 (1932)................................................................... 19 Franklin v. Hinds, 101 N.H. 344 (1958).............................................................. 8, 15 Claremont v. Craigue, 135 N.H. 528 (1992)....................................................... 6 Claremont School District v. Governor, 138 N.H. 183 (1993)........................... 8, 9 Claremont School District v. Governor, 142 N.H. 462 (1997)........................... 9

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Girard v. Allenstown, 121 N.H. 268 (1981)....................................................... 6, 11 Hooksett v. Baines, 148 N.H. 625 (2002)........................................................... 6,12 Laconia Board of Education v. Laconia, 111 N.H. 389 (1971)........................... 15 Lakeside Lodge, Inc. v. New London, 158 N.H. 164 (2008).............................. 14 Manchester School District v. Manchester, 150 N.H. 664 (2004)...................... 5,6,7,8,9, 11 Morrison v. Manchester, 58 N.H. 538 (1879)..................................................... 19 Opinion of the Justices, 76 N.H. 609 (1913)....................................................... 19 Opinion of the Justices, 145 N.H. 680 (2001)..................................................... 5 Thayer v. Tilton, 151 N.H. 483 (2004)................................................................ 14 Legislation House Bill 1522 (2010)....................................................................................... 3,13 Senate Bill 487-L (2010).................................................................................... 3 Senate Bill 488 (2010)........................................................................................ 3 Charters Derry Charter § 9.4.............................................................................................. 1,15 Dover Charter § 6-3.1.......................................................................................... 1,10,19 Dover Charter § 9-4(C)........................................................................................ 1 Franklin Charter § C-32....................................................................................... 1,10,15 Laconia Charter § 5:03.5...................................................................................... 10 Manchester Charter § 6.15................................................................................... 10 Nashua Charter § 56-c......................................................................................... 10,15 Rochester Charter § 43-a..................................................................................... 10

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Treatises 13 P. Loughlin, New Hampshire Practice, Local Government Law § 36.......... 6

INTEREST OF AMICUS CURIAE

The New Hampshire School Administrators Association (hereinafter “NHSAA”) is a

non-profit, tax exempt corporation dedicated to providing the best possible public education for

the children of New Hampshire. The membership includes superintendents of schools, assistant

superintendents, school business officials, special education directors, curriculum coordinators

and other system administrators. NHSAA’s interest in this appeal arises from the legal issues

surrounding the application of municipal charter amendments that impose budget, spending and

tax caps upon school districts wholly contained within municipalities.

STATEMENT OF THE FACTS

Derry, Dover, Franklin, Laconia, Manchester, Nashua and Rochester have amended their

Charters to add budget, spending, and tax caps that are tied to increases in a national index,

usually the National Consumer Price Index - Urban. NHSAA Appendix at 1 (Derry Charter §

9.4)(hereinafter citations to NHSAA’s appendix shall be “App. ___.”); App. 3 (Dover Charter §

6-3.1 & § 9-4(C)); App. 6 (Franklin Charter § C-32); App. 8 (Laconia Charter § 5:03.5); App. 10

(Manchester Charter § 6.15); App. 13 (Nashua Charter § 56-c); App. 15 (Rochester Charter §

43-a). Recently, some citizens of Claremont, Concord and Somersworth pursued similar caps for

their respective municipalities without success. App. 17 (Concord proposed Charter

Amendment). The Dover, Laconia, Manchester and Rochester charter amendments and the

unsuccessful Concord Charter amendment contain essentially the same language. The Derry,

Franklin and Nashua charter amendments contain slightly different language.

In city school districts, the school boards propose their budget but they are dependent on

the municipality’s governing body for their annual appropriation. The governing body

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appropriates a single line item for their school district and the school board then determines how

to allocate that appropriation.

The charter amendments in Dover, Franklin, Laconia, and Manchester single out the

relevant school district and expressly subject it to the cap while not doing so for any other line

item. App. 3 (Dover), 6 (Franklin), 8 (Laconia) & 10 (Manchester). For example, the

Manchester tax and spending cap allows the Manchester Board of Mayor and Alderman to

increase the planning department’s budgetary line item as it sees fit so long as the overall city

budget does not increase by a greater percent than the CPI increased. App. 34. At the same time,

however, it restricts the Board from increasing the school budget line item by anything greater

than the increase in the CPI.1 Id.

A significant difference between the older and newer tax and spending caps is that the

older caps (Derry, Franklin and Nashua) contain exceptions for mandatory spending obligations

whereas the newer caps (Dover, Laconia, Manchester, and Rochester) do not. Such obligations

can arise from state and federal law or pre-existing contracts and, for example, include state

school funding law, federal special education law and pre-existing contracts.

Except in Derry and Nashua, the caps allow the municipal governing body to override the

tax and spending limitation upon a 2/3 supermajority of all members. Derry and Nashua do not

have this general override provision. All caps, however, allow for exempting out principal and

interest payments on bonds by the same 2/3 supermajority vote. Except in Derry and Franklin,

the caps also allow for exempting out capital spending by, again, a 2/3 supermajority vote.

Tax and spending cap proponents initiated their efforts at the local level through voter

petitions for a charter amendment. Each of the amendments were adopted after a voter 1 The Nashua cap expressly applies to all departmental budgets and the Derry and Rochester caps apply to the overall budget without singling out their school districts.

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referendum passed them by a simple majority. Proponents did not, however, obtain prior

legislative authority for municipalities to enact such caps. Interestingly HB 1522, SB 487-L, and

SB 488 were introduced in the current legislative session with the intention of providing such

authority. App. 83 (HB 1522), 86 (SB 487-L) & 88 (SB 488). On January 2, 2010, HB 1522, an

Act Relative to Local Spending Caps, was introduced in the New Hampshire House

Representatives. HB 1522 seeks to authorize “cities and towns to adopt charter provisions

establishing limitations on the growth of budgets and taxes.” App. 71 (HB 1522 Analysis). The

bill was referred to the House Local and Regulated Revenues Committee where a 12-6 majority

voted the bill “inexpedient to legislate.” App. 85 (HB 1522 Docket) On March 3, 2010, the New

Hampshire House of Representatives voted HB 1522 inexpedient to legislate by a vote of 202 to

148. Id.

On January 21, 2010, Senate Bills 487-L and 488, seeking to accomplish the same goal as

HB 1522, were introduced in the New Hampshire Senate. Both bills were referred to the Senate

Municipal Affairs Committee, which held a hearing on them on March 4, 2010. To date, the

Committee has not voted on these bills.

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SUMMARY OF THE ARGUMENT

Three constitutional precepts underlie NHSAA’s position that amending a municipal

charter to cap a school district’s or school department’s proposed budget, local tax, and spending

is unlawful. First, New Hampshire is not a home rule state. Second, public education is a state

constitutional duty. Third, the power of taxation rests with the Legislature. In light of these

precepts, it is NHSAA’s position that amending a charter to include such a cap is unlawful

because (1) the Legislature has not delegated the power to enact such amendments and (2) these

amendments conflict with New Hampshire education and tax law.

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ARGUMENT

I. CHARTER AMENDMENTS THAT CAP INCREASES IN SCHOOL BUDGET PROPOSALS, ADOPTED BUDGETS, SPENDING AND TAX RATES ARE UNLAWFUL BECAUSE NEW HAMPSHIRE IS NOT A HOME RULE STATE

New Hampshire is not a home rule state. Manchester Sch. Dist. v. Manchester, 150 N.H.

664 (2004). Instead, the state Constitution vests the supreme legislative authority in the New

Hampshire Legislature. N.H. CONST., pt. II, art. 2. This means municipalities only have such

power as the Legislature expressly delegates to them and such as are necessarily implied or

incidental thereto. Manchester Sch. Dist., at 670. In 1966, the state Constitution was amended to

include Part I, Article 39, which provides:

No law changing the charter or form of government of a particular city or town shall be enacted by the legislature except to become effective upon the approval of the voters of such city or town upon a referendum to be provided for in said law. The legislature may by general law authorize cities and towns to adopt or amend their charters or forms of government in any way which is not in conflict with general law, provided that such charters or amendments shall become effective only upon the approval of the voters of each such city or town on a referendum.

N.H. CONST. pt. I, art. 39. Part I, Article 39, prevents the Legislature from changing a

municipality’s form of government without a referendum of the people affected. Op. of the

Justices, 145 N.H. 680, 683 (2001). The Legislature’s plenary power over municipalities is

therefore limited by Part I, Article 39. Id. Nonetheless, Part I, Article 39 does not grant

municipalities supreme legislative power over municipal affairs. Id. Instead, such authority

remains vested in the Legislature. Id.; N.H. CONST. pt II, art. 2.

Through RSA 49-B, RSA 49-C and RSA 49-D, the Legislature has delegated to

municipalities the limited power to revise and amend their charters relative to their form of

government. Manchester Sch. Dist., 150 N.H. at 669-70. RSA 49-B, -C, and -D “constitute a

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detailed, comprehensive scheme for the establishment and operation of local government.” Id. at

667. RSA 49-B allows municipalities to choose their form of government from the list of choices

set forth in RSA 49-C (forms of cities) and RSA 49-D (forms of towns). Id. Since 1988, RSA 49-

B:1 has also provided:

[T]his chapter shall be strictly interpreted to allow towns and cities to adopt, amend, or revise a municipal charter relative to their form of government so long as the resulting charter is neither in conflict with nor inconsistent with the general laws or constitution of this state.

(emphasis added) (the prior version required liberal construction of RSA 49-B. 13 P. Loughlin,

New Hampshire Practice, Local Government Laws §36). Because of the inter-relationship

between these statutes, the Court considers RSA 49-B:1 in construing the scope of power granted

by RSA 49-C and -D. Manchester Sch. Dist., 150 N.H. at 669.

RSA 49-B, -C, and -D do not grant municipalities the power to make a school district a

municipal department, to alter their retirement systems, to enact rent control ordinances, or to

impose term limits. Id. at 671 & 672; Appeal of Barry, 143 N.H. 161, 165-66 (1998); Girard v.

Town of Allenstown, 121 N.H. 268, 271-73 (1981); Town of Hooksett v. Baines, 148 N.H. 625,

630 (2002). This Court also held in Claremont v. Craigue that RSA 49-B does not grant cities the

power to amend their charters to provide for voter approval over final city budgets. 135 N.H.

528 (1992). The Court opined that the Legislature did not provide for “city” voters to have final

approval over city budgets and that such power would conflict with RSA 49-C:23, which makes

explicit the Legislature’s intent that the city’s governing body approve the annual budget. See id.

at 531. The Court further opined that “the duties imposed upon a city council by RSA chapters

44 and 47 are fundamentally incompatible with voter approval of the annual [city] budget.”

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A. The Legislature Has Not Expressly Delegated The Power To Enact These Charter Amendments

1. There Is No Express Delegation of Power To Enact These Charter

Amendments in RSA 49-B, -C, or -D

There is no language in RSA 49-B, -C or -D expressly delegating the power to enact a

charter amendment that caps the budgets a city, a town council town, or a school district may

propose, enact and fund. New Hampshire municipalities only have such powers as are granted

by the Legislature. Manchester Sch. Dist., 150 N.H. at 666. The Court will strictly interpret this

grant of local power. Id.; RSA 49-B:1. Municipalities that elect to be a city must enact charters

that comport with the framework established in RSA 49-C and those that elect to be towns must

enact charters that comport with the framework established in RSA 49-D. Manchester Sch.

Dist., 150 N.H. at 668 (citing RSA 49-B:2, III).

RSA 49-C:23, Budget Process and Fiscal Control, is the section in RSA 49-C that

addresses city budgets. When construing a statute the Court first examines the statute’s language

giving undefined words their plain and ordinary meaning, but keeping in mind the legislature’s

intent, which is determined by examining the construction of the whole statute and not simply by

examining individual words and phrases alone. Id. at 669. RSA 49-C:23 prescribes the budget

process and fiscal control that cities must have in their charters but affords no liberty to cap the

budget that cities, town council towns (through RSA 49-D:3) and school districts may propose,

enact and fund. RSA 49-C:23, IX does require a city or town council town charter to establish a

“fiscal control function” but this is an accounting function, not a political function. RSA 49-

C:23, IX. Nowhere in Subsection IX is “fiscal control function” equated with caps on school

district budgets or school tax rates. Reading Section IX in its entirety reveals that it does not

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provide a basis for conjuring up the authority to cap a school district’s budget or the local school

tax rate.

Town council governments fare no better. RSA 49-D:2 allows for the Town Council /

Town Manager form of government and instructs that such a town shall have the legislative body

described in RSA 49-D:3. RSA 49-D:3, I dictates that town council towns shall adopt a charter

that sets forth specific procedures for the preparation, presentation, public hearing and adoption

of annual budgets using the guidelines set forth in RSA 49-C. Therefore nothing in RSA 49-C or

RSA 49-D grants cities or town council towns the authority to enact budget caps by charter

amendment.

2. There Is No Express Delegation Of Power In RSA 49-B, -C, Or -D to Cap A School Board’s Budget Proposal, The Local School Tax Or School Spending

RSA 49-B, -C and -D do not reference school districts, let alone delegate authority to

municipalities over their budget proposals, budget requests, and local school tax rates. See

Manchester Sch. Dist., 150 N.H. at 672.2 As this Court has previously stated, there is a

comprehensive statutory scheme that evidences the Legislature’s intent not to wholly abdicate its

fiscal control over school districts via RSA 49-B, -C or -D. Id. at 671. Under no circumstances

“will municipal officers be permitted to exercise any greater degree of control over school

finance than that clearly intended by the legislature.” City of Franklin v. Hinds, 101 N.H. 344,

345 (1958). Silence in RSA 49-B, -C, and -D demonstrates the Legislature’s intention not to

authorize municipalities to apply these charter amendments to school districts.

In New Hampshire education is a constitutionally mandated state function regulated by

the State Department of Education and overseen by a State Board of Education. Claremont Sch.

2 RSA 49:C:34, Savings Clause, mentions school districts in the context that existing charter provisions and laws governing school districts and the borrowing of money in aid of school districts shall continue in force.

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, 138 N.H. 183 (1993); Claremont Sch. Dist. v. Governor, 142 N.H. 462 (1997);

N.H. CONST. pt. II, art. 83. The statutory framework for public education includes such laws as

RSA chapter 186-C (Special Education), RSA chapter 194 (School Districts), RSA chapter 194-

C (School Administrative Units), RSA chapter 198 (School Money), and RSA 273-A:12,

Evergreen Pay. This scheme also includes the Legislature’s definition of an adequate education,

its formula that determines the cost of such an education, its mechanism for funding such

education in every New Hampshire school district, and its requirements for how such funding

must be spent. RSA 193-E:2-a; RSA 198:40-a, -b, -c, -d; RSA 198:41, :42 & :46. School

Districts and school boards are granted extensive powers as an arm of the state including the

power to raise money, procure land, build school houses, obtain insurance, construct and equip

facilities, provide employee benefits, purchase vehicles and pay debts. RSA 194:3. It is also the

school board’s statutory duty to provide at district expense elementary and secondary education

to all pupils who reside in the district. See RSA 189:1-a. This comprehensive statutory scheme

further demonstrates the Legislature’s intention not to authorize municipalities to hamstring the

state by applying these charter amendments to its school districts. See Manchester Sch. Dist.,

150 N.H. at 672.

3. There Is No Express Delegation Of Power For Requiring A Supermajority Vote To Override The Limitations In These Amendments

There is no express delegation of power to amend a municipal charter to require a

supermajority vote on school district budgetary matters except for supplemental appropriations

and bonds. RSA 49-C delegates the power for a supermajority vote in one circumstance only;

for the city’s governing body to make supplemental appropriations for purposes not included in

the approved budget. RSA 49-C:23, VI. RSA 49-D only delegates authority for supermajority

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votes to approve bonds. RSA 49-D:3, I-a & II-A; see also RSA 33:8, :8-c, :8-d & :9 (requiring

supermajority votes to approve bonds in towns and cities). Despite the lack of statutory authority,

these charter amendments (except in Derry where there is no override provision) require a

supermajority vote of the city council or board alderman and town councils for their respective

school boards to develop a budget that requests an increase in the prior fiscal year’s spending

greater than the change in the CPI. App. 3 (Dover Charter §6-3.1(A)); App. 6 (Franklin Charter

§ C-32(A)); App. 8 (Laconia Charter §5:03.5(A)); App. 10 (Manchester Charter § 6.15); App. 13

(Nashua Charter § 56-d); App. 15 (Rochester Charter §43-a(A)). These charter amendments

therefore exceed the powers delegated by the Legislature since there is no power to require a

supermajority vote on the fiscal matters of a school district other than supplemental

appropriations and bonds.

4. There Is No Express Delegation Of Power To Bind Future Municipal Legislative Bodies Regarding Budgets That School Districts May Propose And Municipalities May Enact And Fund

Nothing in RSA 49-C expressly allows a municipality to amend its charter to hinder

future governing bodies and school boards from determining the amount of their budgets and

seeking to fund those amounts with taxes. The list of items set forth in RSA 49-C concerning

city and town council / town manager budgets (per RSA 49-D:2 & 3, I) is extensive and detailed.

There is no mention, however, of “capping” the budget proposals, budgets or tax rates of future

legislative bodies. Certainly, the Legislature knows how to delegate such power when it intends

to do so. Compare RSA 273-A:3 (power to bind future local legislative bodies to collective

bargaining agreements); RSA 31:3 & Blood v. Manchester Electric Light Co., 68 N.H. 340

(1895) (multi year contracts); RSA 33:3, :8 & :9 (power to bind future legislative bodies to

bonds); RSA 33:7-e (power to bind future legislative bodies to equipment lease agreements with

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non-appropriation clauses). Unlike in the context of collective bargaining agreements, multi-

year contracts, bonds and lease purchase agreements, the Legislature has not delegated the power

to bind future local legislative bodies in terms of the budgets that they may propose, enact, and

fund. Charter amendments that purport to do so are therefore unlawful.

B. The Power to Enact These Charter Amendments Is Neither Implied By Nor Incidental To RSA 49-C:23

The sole remaining question is whether capping authority is necessarily implied by or

incidental to an express legislative delegation of power. Municipalities “only have such powers

as are expressly granted to them by the legislature and such as are necessarily implied or

incidental thereto.” Manchester Sch. Dist., 150 N.H. at 670 (citing Girard v. Town of

Allenstown, 121 N.H. 268, 271 (1981)(emphasis added). The powers delegated by RSA 49-B, -

C and –D, including implied or implicit delegations, are strictly construed. Manchester Sch.

Dist., 150 N.H. at 669; RSA 49-B:1. The Court also construes a statute by first examining the

language in the statute and giving undefined words their plan and ordinary meaning. Manchester

Sch. Dist., 150 N.H. at 669. In doing so, the Court keep the underlying legislative intent in mind,

which is determined by “examining the statute as a whole, and not simply by examining isolated

words and phrases found therein.” Id.

These charter amendments are neither implied by nor incidental to RSA 49-C:23. RSA

49-C:23 is not a general delegation of power over school district budgets. Instead, it delegates

only the power to enact city and town council town charters (through RSA 49-D:3, I(d)) that

provide: (1) a budget submission date; (2) a final adoption date; (3) that failing adoption the

budget proposed by the chief administrative officer shall become the budget; (4) one or more

public hearings on the budget before adoption; (5) certain notice requirements; (6) procedures for

line item transfers; (7) annual independent audit; (8) supplemental appropriations by a 2/3

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majority vote; and (9) periodic reporting of the city’s finances to the state. Given the nature of

these listed powers, the authority to cap the budgets that a school district may propose and the

local governing body may enact and fund is not implied by or incidental to any of them.

As noted in Section I(A)(1), above, RSA 49-C:23, IX does provide for establishing a

“fiscal control function,” but this is an accounting function and not a means to conjure up the

authority required to enact budget caps. Nor can it be said the authority for such caps is implied

by or incidental to having an auditor or accountant. RSA 49-C:23, IX, strictly construed, does

not expressly or implicitly authorize these charter amendments.

The fact that the Legislature has expressly delegated powers regarding less vital matters

than capping school district budget proposals, budgets, and spending buttresses a finding that no

law inferentially authorizes these amendments. Had the Legislature intended to vest towns with

the ability to impose caps on the municipal and school tax, budget proposals, budgets and

spending, it would have done so expressly or, at the least, granted municipalities the power to

restrict these matters generally. See Town of Hooksett v. Baines, 148 N.H. 625, 630-31 (2002).

The law is replete with examples. See RSA 49-C:23, VI, RSA 49-D:3, RSA 33:8 & 9

(authorizing supermajority voting requirements in certain express circumstances); RSA 273-A:3

(authorizing collective bargaining agreements); RSA 31:3 (authorizing multi year contracts);

RSA 33:7-e (authorizing equipment lease agreements with non-appropriation clauses); RSA

31:94-b (authorizing cities to change fiscal year by a 2/3 supermajority vote); RSA 31:41-d

(authorizing pin ball machine regulation); RSA 31:100 & 102-a (authorizing municipalities to

issue street fair, hawker, peddler, and vendor permits); RSA 31:105 & 106 (authorizing

municipal indemnification); RSA 31:107 (authorizing purchase of insurance); RSA 31:110

(authorizing city forests); RSA 31:121 (authorizing central business districts); RSA 34:1

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(authorizing capital reserve funds); RSA 44:10-a (authorizing contingency funds); RSA 47:1-b

(authorizing spending special revenue funds); RSA 47:11 (authorizing construction of common

drains and sewers); RSA 47:22 (authorizing building regulation); RSA 47:22-a (authorizing

construction standards for manufactured housing); RSA 48:18 & 19 (authorizing the hiring of

human service directors and establishing the educational and professional experience

qualifications for such position). Inasmuch as the Legislature has demonstrated its ability to

delegate power in a multitude of subject areas, some less than vital, there is no basis for imputing

authority in a matter of such import as budgetary caps.

In fact, the three enabling bills introduced in the Legislature this session demonstrate that

the Legislature knows how to authorize municipalities to enact these charter amendments, at

least at first glance, if it intends to do so. See App. 83 (HB 1522 (2010)), 86 (SB 487-L (2010))

& 88 (SB 488 (2010)). There is no delegation of power for municipalities to enact charter

amendments that cap the budgets that municipalities and school districts may propose, enact and

fund. Such amendments are therefore unlawful.

II. CHARTER AMENDMENTS THAT CAP INCREASES IN SCHOOL DISTRICT BUDGET PROPOSALS, SPENDING AND TAX RATES ARE UNLAWFUL BECAUSE THEY CONFLICT WITH AND ARE INCONSISTENT WITH NEW HAMPSHIRE LAW

A. RSA 49-B:1 Prohibits Charter Amendments That Conflict With Or Are

Inconsistent With New Hampshire Law

Even if there was a general delegation of power to enact limits on municipal and school

district budgeting, taxing, and spending authority by charter amendment (and NHSAA maintains

there is no such delegation) the caps enacted to date would still be unlawful because they conflict

with New Hampshire law. RSA 49-B:1 prohibits municipalities from enacting a charter

amendment that conflicts with or is inconsistent with the general laws or the state constitution.

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This prohibition is similar, if not the same, as the preemption doctrine, which provides that local

regulation is invalid when it is conflicts with or is inconsistent with state law or is contrary to the

legislative intent underlying a statutory scheme. Thayer v. Town of Tilton, 151 N.H. 483, 487

(2004). A local law conflicts with or is inconsistent with state law if: (1) it permits that which a

state law prohibits, or vice versa; (2) it frustrates the statute’s purpose - runs counter to

legislative intent underlying the statute; or (3) the nature of the regulated subject matter requires

“exclusive state regulation to achieve the uniformity necessary to serve the state’s purpose or

interest.” Id.; Lakeside Lodge, Inc. v. Town of New London, 158 N.H. 164, 168 (2008). RSA

49-B:1 essentially applies the preemption doctrine to charter amendments. As such, a charter

amendment conflicts with or is inconsistent with state law if: (1) it permits that which a state law

prohibits, or vice versa; (2) it frustrates the statute’s purpose - runs counter to legislative intent

underlying the statute; or (3) the nature of the regulated subject matter requires “exclusive state

regulation to achieve the uniformity necessary to serve the state’s purpose or interest.” Cf.

Lakeside Lodge, Inc., 158 N.H. at 168; Thayer, 151 NH.H. at 487.

B. The Caps Are Unlawful Because They Conflict With New Hampshire Education Law

1. These Charter Amendments Conflict with NH Laws Requiring School

Districts to Carry Out Their Mandatory Obligations

Except in Derry, Franklin and Nashua, these charter amendments are also unlawful

because they do not recognize mandatory federal, state and contractual obligations. Tax and

spending caps, to the extent they are authorized (and NHSAA asserts they are not) “must ensure

that no impairment of the [municipality’s] ability to carry out its mandatory obligations will

occur.” Bell v. Arel, 123 N.H. 311, 316 (1983)(decided prior to the 1991 amendment of RSA

49-B and enactments of RSA 49-C and -D, and at a time when RSA 49-B provided that it was to

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be “liberally construed,” contrary to the current language that requires it be “strictly construed.”).

The municipal legislative body cannot refuse to appropriate the funds necessary for that

municipality, including its school district, to meet its State, Federal, and pre-existing contractual

obligations. See id.; Laconia Bd. of Educ. v. City of Laconia, 111 N.H.389, 393(1971)(City

council cannot refuse to appropriate money required by the school board to meet statutory

obligations and minimum standards established by the State Board of Education); Franklin, 101

N.H. at 345. The charters in Derry, Franklin and Nashua provide that their tax and spending

caps shall not limit the municipality from funding mandatory obligations. App. 1 (Derry Charter

§9.4(A)); App. 6 (Franklin Charter § C-32(A)); App. 13 (Nashua Charter § 56-c). The other tax

and spending caps, however, omit this exception and are unlawful as a result.

a. These Charter Amendments Fail To Provide For The Mandatory Obligation Imposed By RSA 186-C:13, I

Charter amendments that fail to provide for mandatory obligations hinder and could

preclude a school district’s ability to comply with RSA 186-C:13. Section I of this statute

establishes that all expenses incurred to educate a child with an educational disability shall be

paid by the school district where the child resides.3 The charter amendments now in effect do

not provide for this statute and will prevent school districts from budgeting compliance with this

duty if doing so will result in total municipal or school expenditures exceeding the increase in the

CPI.

b. These Charter Amendments Fail To Provide For Mandatory Obligations Imposed By Federal Law

School districts must also comply with federal law, including the McKinney Vento

Homeless Assistance Act (42 U.S.C. § 11431 et seq.), which requires school districts to educate

3 Except in two irrelevant circumstances.

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homeless school children located within the district, Section 504 of the Rehabilitation Act of

1973 (29 U.S.C. § 794) which requires school districts to ensure that disabled students are

provided the same free appropriate education as non-disabled students, and the Individuals with

Disabilities Education Act (20 U.S.C. § 1400 et. seq.), which requires school districts to provide

students with learning disabilities a free appropriate public education designed to meet the

child’s unique needs and from which the child will receive educational benefit.

RSA 186-C:12 authorizes the state board of education and school districts through the

state board to receive federal special education money, to incorporate it into their budgets, and to

spend it in accord with providing special education per RSA 186-C. RSA 194-C:6 also

authorizes school districts to request, receive, and expend federal funds for educational purposes.

Federal education money, however, comes with a Maintenance of Effort (“MOE”) requirement.

20 U.S.C. § 7901 (Part of the “No Child Left Behind Act of 2001” (20 U.S.C. 6301 et.

seq.))(MOE applies to all “covered programs.”); see also 20 U.S.C. § 7801 (defining “covered

programs”). MOE is a federal requirement that requires school districts to maintain a certain

level of local fiscal effort to be eligible for full participation in federal grant programs. 20 U.S.C.

§ 7901. School Districts not meeting MOE requirements face loss of a portion of their federal

funds. Id. The charter amendments now in effect do not provide for these federally imposed

mandatory obligations and will prevent school districts from complying with them if doing so

would result in total municipal or school expenditures exceeding the increase in the CPI.

Without such provision, the charter amendments prohibit that which RSA 186-C:12 and RSA

194-C:6 permit, seeking and using federal education funds. The charter amendments thereby

conflict with these statutes and are unlawful as a result.

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c. These Charter Amendments Fail To Provide For Mandatory Obligations Imposed By RSA 273-A:12, Evergreen Pay

Municipalities and school districts must comply with RSA 273-A:12, VII. This statutory

subsection requires municipalities and school districts if faced with a collective bargaining

impasse to continue the prior agreement’s pay plan until a new agreement is reached. RSA 273-

A:12, VII. Without such provision, the charter amendments could frustrate or prohibit that

continuation of pay plans under prior collective bargaining agreements as may from time to time

be required under RSA 273-A:12, VII if such continuation will cause the municipality or school

district to exceed the permissible budget and spending increase allowed by the charter. The

charter amendments are thereby inconsistent with this statute and are unlawful as a result.

d. These Charter Amendments Fail To Provide For Mandatory Obligations Imposed By Pre-Existing Contracts

Municipalities and school districts must comply with pre-existing contracts such as

collective bargaining agreements, vendor contracts, contracts with each other, and contracts with

other third parties. Municipalities and school districts have the power to contract, including

agreeing to multi-year general contracts, collective bargaining contracts, and lease agreements.

RSA 31:3; RSA 33:7-e; RSA 273-A. School Districts also have the power to enter into joint

maintenance agreements and long-term contracts with other districts. RSA 194:21 & :21-a; see

also RSA 194:22 (power to make contracts with academies, high schools or other literary

institutions in certain circumstances). The charter amendments that do not exempt mandatory

obligations could cause a municipality or a school district to violate pre-existing contracts if

meeting such obligations will require the municipality or school district to violate the limitations

imposed by the charter amendments. These charter amendments are therefore inconsistent with

RSA 31:3, RSA 273-A, RSA 194:21 and RSA 194:21-a insofar as the amendments will prohibit

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what these statutes permit, and frustrate their purpose by restraining power to enter into

contracts. As such, the charter amendments are unlawful.

2. These Charter Amendments Are Inconsistent With The Delegation Of Authority To The New Hampshire Board Of Education

These charter amendments are inconsistent with the Legislature’s delegation of authority

to the New Hampshire Board of Education regarding oversight of federal education funds and

the mandatory obligations of a school district. RSA 186:6 authorizes the state Board of

Education to make regulations necessary to enable the state to comply with federal education

law. RSA 186-C:12 authorizes the state Board of Education to cooperate with the federal

government in the education of children with disabilities, to receive and expend funds from the

federal government related to the same, and to make such funds available to local school districts

for such purposes. RSA 186-C:16 authorizes the state Board of Education to develop rules

regarding special education. RSA 186-C:18 further delineates the authority delegated to the state

Board of Education to distribute special education aid to local school districts. In other words, it

is the state Board of Education’s duty to ensure that local school districts which receive federal

funds through the Board comply with all federal and state regulations regarding those funds,

including MOE requirements. The charter amendments that fail to provide for a school district’s

mandatory obligations, as discussed in the preceding subsection, unconstitutionally hamstring the

state Board of Education’s authority.

3. These Charter Amendments Are Unlawful Because They Are Inconsistent With The Delegation of Budgetary Authority To Local School Boards

Charter amendments that limit a city or town council town school board’s budget

proposal conflict with the board’s authority to develop and request a budget. Authority to

develop and request the school district budget is vested in the school board. RSA 32:2 & :5; RSA

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197:5-a; RSA 194-C:9, II. School district superintendents are also charged with delivering an

“Annual budget, inclusive of all sources of funding.” RSA 194-C:4, II(p). The charter

amendments that expressly apply to school districts limit the school board’s statutory authority to

develop and request a budget by prohibiting the Board from proposing any budget increase

greater than the change in the CPI. App. 3 ((Dover Charter § 6-3.1) (specifically applying to

developing of annual budget proposals)); App. 8 ((Laconia Charter § 5:03.5(A))(specifically

applying to developing annual budget proposals)); App. 10 (Manchester Charter §

§6.15(A))(specifically applying to developing annual budget proposals)); App. 13 (Nashua

Charter § 56-c) (specifically applying to preparing budgets)). No such prohibition appears in

RSA 32:2 and :5, RSA 197:5-a, RSA 194-C:9, or RSA 194-C:4. As such, these charter

amendments prohibit an act that New Hampshire law permits and, at the least, frustrate the law

insofar as it provides school boards with the power to develop and request school district budgets

without consideration of a budget cap.

C. The Caps Are Unlawful Because They Conflict with New Hampshire Tax Law

Charter amendments that cap municipal and local school tax rates are unlawful because

they conflict with New Hampshire tax law. The New Hampshire Constitution gives the

Legislature the authority to tax. Morrison v. Manchester, 58 N.H. 538, 549 (1879); N.H.

CONST. pt. I, arts. 12 & 28, pt. II, arts. 2, 5, 5-b, & 6. A municipality cannot act contrary to or

beyond the taxing authority delegated to it. Op. of the Justices, 76 N.H. 609 (1913); Bull v.

Gowing, 85 N.H. 483 (1932). Any act not authorized is unlawful. See id. In other words, the

question is not whether the New Hampshire tax law forbids a particular act but, rather, whether it

specifically authorizes such an act. These charter amendments cap increases in the local school

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tax rates without any statutory authority in the tax statutes to do so. As such, these amendments

are inconsistent with the comprehensive statutory tax scheme and are unlawful.

CONCLUSION

For the foregoing reasons, Amicus New Hampshire School Administrators Associations

respectfully requests the Court rule that these charter amendments are unlawful.

REQUEST FOR ORAL ARGUMENT

Amicus Curiae requests fifteen minutes of oral argument to be presented by Attorney

Dean Eggert. A Motion to allow such oral argument is being filed contemporaneously with this

Brief.

an B. Eggert,ltsq. Bar #742 Gregory M. Sargent, Esq. Bar #16490 Wadleigh, StalT & Peters, PLLC 95 Market Street Manchester, NH 03101 (603) 669-4140

CERTIFICATE OF SERVICE

I hereby certify a copy of this Brief was mailed on this 10th day of March, 2010 to Robeli A. Backus, Esq., Peter Chiesa, Esq., James W. Kennedy, III, Esq. and Joseph K. Levasseur, Esq.

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