In five chapters, this document's first part reports on research on the interrelationship of school and municipal finance in New Hampshire. The document's second part briefly summarizes the research report and discusses policy changes suggested by the results. Chapter 1 of the research report describes New Hampshire schools and the state aid system, including foundation aid, business profits tax (BPT) revenues, and categorical aid programs. Chapter 2 discusses theories of school finance equity and wealth neutrality and the effect of municipal overburden on school spending. In chapter 3 the author reports on a questionnaire survey of 74 New Hampshire superintendents, board members, and town officials on the estimated effects of foundation and BPT aid levels on district and municipal spending. Chapters 4 and 5 review the methodology and results of econometric analyses estimating school spending responses to both state aid and municpal overburden and simulating the impact of alternative state aid formulas on wealth neutrality. An appendix provides a copy of the survey questionnaire. In the document's second part the authors review the research and its results and emphasize the strong relationship found between school spending and municipal finance. (RW)