In January 1982, Pittsfield, Allenstown, Farmington, Franklin, Lisbon, Raymond, and Winchester filed a lawsuit against the state that became known as the Jessemen education lawsuit. In their Petition for Declaratory Judgment filed in Merrimack Superior Court, the school districts charged that the New Hampshire system of financing public education violated Part -2 Article 83 of the state Constitution by failing to spread educational opportunities and advantages equitably among the school districts in this state.

During the same period, other education reform advocates began the process of reforming the way the state distributed Foundation Aid to the school districts.

Dick Goodman, the Executive Director of the New Hampshire School Board Association brought the expertise of John Augenblick, an education funding specialist, into the funding reform debate. In May 1983, Mr. Augenblick delivered a report to the House and Senate Education Committees, which critiqued the state's system of funding public education and recommended ways to make state education funding more equitable.

The House Education committee established a study group and after 19 drafts introduced legislation in January 1985 that incorporated the recommendations of the Augenblick report. The bill included the "Augenblick Formula", which called for the distribution of Foundation Aid using an equalization factor, based on a district's property wealth, income wealth and tax effort.

In the spring of 1983, the Jessemen case went to the Supreme Court on Interlocutory Appeal. On 2/13/84 the Supreme Court remanded the Jessemen case back to the Superior Court. The Supreme Court stated it could not reach the interlocutory questions because the Superior Court had not made any rulings. The state filed a Motion to Dismiss the Jessemen lawsuit on 5/17/84

Citing the pending Augenblick inspired legislation, the school districts filed a motion to stay the proceedings in Superior Court on 12/4/84. At no time during the litigation did the state ever negotiate with the school districts.

Former State Representative Ellen Ann Robinson, one of the primary sponsors of the Augenblick legislation and Attorney Arthur Nighswinder, who represented the school districts in the Jessemen lawsuit, stated that the plaintiff school districts did not participate in the drafting of the Augenblick legislation.

In January 1985, the state was in great fiscal shape. There was a $40 million dollar budget surplus and a statewide unemployment rate of 2 percent. Governor John Sununu proposed increasing Foundation Aid from $33 million to $39 million. The House proposed appropriating $50 million dollars for Foundation Aid.

The House and Senate passed the Augenblick Legislation but Governor Sununu vetoed it on 5/22/85. Sununu vetoed the legislation because it contained language requiring, "that all children in New Hampshire be provided with equal educational opportunities." Ellen Ann Robinson stated that the language was taken from the Augenblick report.