A recent New Hampshire report questions the popular wisdom among many city and town elected officials that if they allow more housing development, it will draw families with children and drive up educational costs.
Each new home in a case study of four Granite State towns generated a net gain of $1,711 on average for school districts in the 2023-24 budget year, according to the February report by the New Hampshire Fiscal Policy Institute, a research organization. Single-family homes and apartments resulted in roughly the same returns. The group cited data from a study by New Hampshire Housing, a public agency that helps families buy homes, published last fall. The analysis included homes built between 2014 and 2023.
Concerns about new homes generating more education costs might have been more valid in the past, the institute said, but the number of school-aged children per house in the state has declined. The state is aging faster than the nation as a whole, according to another report the institute published in 2024; it said that by 2030, the number of people over age 65 will exceed the number of children.
Rural states in New England, including New Hampshire but also Vermont and Maine, have fewer public school students per home than other parts of the U.S., according to a 2020 analysis by the National Association of Home Builders. Massachusetts has also seen a decline in school enrollment due to aging, the Boston-based Metropolitan Area Planning Council indicated in a 2017 report.
Outside the region, Florida and Washington, D.C., also rank low in terms of school participation. The U.S. Department of Education projects that from 2019 to 2030, public and private school enrollment will decline by 8%.
As of 2023, there was one public school student for every three homes in New Hampshire, the fiscal policy institute said. Single-family homes generate more students than apartments or manufactured homes. The analysis of the towns of Dover, Merrimack, Deerfield and Dunbarton from 2014 to 2023 found that every 2.5 single-family homes produced one student, while it took nearly 17 apartments or condos to generate each additional learner.
“New construction in New Hampshire communities may not result in an influx of children that would result in the need to increase local property taxes,” Nicole Heller, a senior policy analyst for the institute, wrote on the organization’s website.
The New Hampshire education department recently said the average cost to educate each public school student is $22,000. That number is based on the fixed costs of operating schools such as maintaining buildings, said Heather McCann, a spokesperson for New Hampshire Housing.
“In contrast, our study estimates the marginal cost — the additional cost of educating one more student — which excludes many of these fixed expenses,” she said in an email. “Additionally, new housing generates property tax revenue. If the property tax contribution from new homes exceeds the marginal cost of educating additional students, the town experiences a net fiscal gain.”
For example, Dover, a town of 33,000 that saw 1,316 new homes built between 2014 and 2023, saw a net gain of $2,406 in a recent budget year for its schools from each new home. New Hampshire Housing reached that number by subtracting the $2 million cost to educate additional students from the $5 million the town reaped in property taxes from the new homes.
The institute’s point about school-aged children’s effect on local government budgets was part of a broader analysis that indicated that New Hampshire faces multiple barriers to generating more housing. After producing 9,000 new homes each year in 2004 and 2005, the rate fell to 2,100 houses in 2011. In 2022, production had recovered somewhat, reaching 5,700 new homes. Nearly half of these were in Hillsborough and Rockingham counties, along the Massachusetts state line.
Unwarranted perceptions of how families with children in new homes drive up costs for taxpayers are just one barrier to producing more housing, according to the fiscal policy institute report. Another is that many towns, especially in more scenic areas in the state’s north, have limited housing options because many homes are for seasonal or vacation use.
Heller said the state deserves praise for giving $5 million in grants since 2023 to “housing champion” towns and cities that voluntarily reform their rules to make it easier to build homes. But she said the state needs to monitor building permits and available units closely to measure the grant program’s effectiveness.