This is the second appeal of this case. In 1991, the plaintiffs filed a petition for declaratory and injunctive relief challenging the method by which the State of New Hampshire provides and funds education to New Hampshire children and the disproportionality of the property taxes levied to pay for education. The plaintiffs are five school districts, five students, and eight taxpayers and parents. The petition was dismissed by the Trial Court (Manias, J.) for failure to state a claim upon which relief could be granted. In Claremont School District v. Governor, 138 N.H. 183, 635 A.2d 1375 (1993) (Claremont I), this court reversed, holding that it was the State's duty to provide a constitutionally adequate public education and to guarantee adequate funding, and remanded for a trial on the merits.

On remand, following a trial, the Trial Court (Manias, J.) ruled in a detailed and thoughtful opinion that: (1) the education provided in the plaintiff school districts is constitutionally adequate; (2) the New Hampshire system of funding public elementary and secondary education guarantees constitutionally adequate funding to each of the plaintiff school districts; (3) the New Hampshire system of school funding does not violate the plaintiffs' right to equal protection under the State Constitution, part I, articles 1, 2 and 12; and (4) the system of school financing does not violate part II, article 5 of the State Constitution. We hold that the property tax levied to fund education is, by virtue of the State's duty to provide a constitutionally adequate public education, a State tax and as such is disproportionate and unreasonable in violation of part II, article 5 of the New Hampshire Constitution. Having so decided, we need not reach the plaintiffs' other claims. Accordingly, we reverse.

Funding for public education in New Hampshire comes from three sources. First, school districts are authorized to raise funds through real estate taxation. Locally raised real property taxes are the principal source of revenue for public schools, providing on average from seventy-four to eighty-nine percent of total school revenue. Second, funds are provided through direct legislative appropriations, primarily in the form of Foundation Aid, Building Aid, and Catastrophic Aid. Direct legislative appropriations account for an average of eight percent of the total dollars spent on public elementary and secondary education, ranking New Hampshire last in the United States in percentage of direct support to public education. Third, approximately three percent of support for the public schools is in the form of federal aid.

At the present time, the State places the responsibility for providing elementary and secondary public education on local school districts. State statutes, rules, and regulations delineate the requirements to be followed by school districts. See RSA 186:5 (1989) (State Board of Education has same powers over public schools as directors of corporation have over business); RSA 189:1-a (1989) (duty of school board to provide at district expense elementary and secondary education); RSA 194:1 et seq. (1989 & Supp. 1996) (general powers and duties of school districts); N.H. Admin. Rules, Ed 200 et seq. (1996). For example, school districts are required to provide standard schools for 180 days per year, RSA 189:1, :24 (1989); provide transportation, RSA 189:6 (Supp. 1996); provide meals to students, RSA 189:11-a (1989); purchase and provide textbooks, RSA 189:16 (1989); meet minimum standards for school approval, RSA 186:8 (1989); provide special education services, RSA 186:6 (1989); and participate in the school improvement and assessment program, RSA ch. 193-C (Supp. 1996).