HB 635-FN-LOCAL – AS INTRODUCED
HOUSE BILL 635-FN-LOCAL
I. Repeals the education property tax effective July 1, 2005.
II. Distributes grants to municipalities based on a formula which determines educational need and municipal capacity using a municipality’s equalized valuation without utilities and its median household income.
III. Provides funding for transportation costs to certain municipalities based on municipal capacity.
IV. Repeals the excess education property tax payments made by certain municipalities.
V. Repeals the low and moderate income homeowner’s property tax relief program.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [
in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Five
AN ACT relative to education funding.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Definitions. RSA 198:38 is repealed and reenacted to read as follows:
198:38 Definitions. In this subdivision:
I. “Municipality” means a city, town, or unincorporated place.
II. “School district” means school district as defined in RSA 194:1 or RSA 195:1.
III. “Elementary school” means a school with any of the grades kindergarten through 8.
IV. “High school” means a school with any of the grades 9 through 12.
V. “Educationally disabled child” or “educationally disabled pupil” means an educationally disabled child as defined in RSA 186-C:2.
VI. “Average daily membership in attendance” means average daily membership in attendance as defined in RSA 189:1-d, III.
VII. “Average daily membership in residence” and “resident pupils” mean the average daily membership in residence as defined in RSA 189:1-d, IV except that no kindergarten pupil shall count as more than 1/2 day attendance per calendar day.
VIII. “Department” means the department of education.
2 Education Trust Fund. Amend the introductory paragraph of RSA 198:39, I, as follows:
I. The state treasurer shall establish an education trust fund in the treasury. Moneys in such fund shall not be used for any purpose other than to distribute [
adequate education] grants to municipalities’ school districts pursuant to RSA 198:42[ , and to provide low and moderate income homeowners property tax relief under RSA 198:56-198:61]. The state treasurer shall deposit into this fund immediately upon receipt:
3 School Money; Calculation of Grants to Municipalities. RSA 198:40 is repealed and reenacted to read as follows:
198:40 Calculation of Grants to Municipalities. The calculation of grants to municipalities shall be determined according to the following formula:
I. Calculate a municipality’s educational need by multiplying the average daily membership in residence in the municipality by $7,809.
II.(a) Divide a municipality’s equalized valuation without utilities, as a percentage of the statewide average equalized valuation without utilities, by its average daily membership in residence to obtain the equalized valuation without utilities per pupil.
(b) Determine the municipality’s median household income, as a percentage of the statewide average median household income, and multiply by 3.
(c) Add the results obtained in subparagraphs II(a) and II(b).
(d) Divide the sum obtained in subparagraph II(c) by 4 to obtain the municipality’s weighted average.
(e) Multiply the municipality’s weighted average by its educational need, as calculated under paragraph I, to yield municipal capacity.
(f) In a municipality where the educational need exceeds municipal capacity, subtract municipal capacity from the municipality’s educational need to obtain the municipality’s preliminary grant.
III.(a) A municipality’s preliminary grant shall be multiplied by:
(1) 3.5, for a municipality with a median household income which is 50 percent or less of the statewide average median household income.
(2) 2.5, for a municipality with a median household income which is between 51 and 80 percent of the statewide average median household income.
(3) 2, for a municipality with a median household income which is greater than 80 percent of the statewide average median household income.
(b) The result of the calculation in subparagraph III (a) is the municipality’s adjusted grant.
IV. To a municipality’s adjusted grant, add:
(a) $1,000 for each pupil, based on the municipality’s average daily membership in residence; and
(b) A transportation grant, based on transportation costs in a municipality for each elementary school pupil and each educationally disabled pupil residing in a municipality, as follows:
(1) After the calculation required in subparagraph II(f), if the remaining municipal capacity exceeds a municipality’s transportation need, then the municipality shall receive no transportation grant.
(2) After the calculation required in subparagraph II(f), if the municipality’s transportation need exceeds its remaining municipal capacity, the municipality shall receive a transportation grant in an amount equal to that portion of the municipality’s transportation need that exceeds its municipal capacity.
V. The sum obtained in paragraph IV is the municipality’s total grant amount. Grants under this section shall be paid from the education trust fund established in RSA 198:39.
VI. Beginning July 1, 2005, and every fiscal year thereafter, the $7,809 amount set forth in paragraph I shall be adjusted according to the change in the United States consumer price index, as calculated by the Bureau of Labor Statistics, United States Department of Labor.
VII. In this section:
(a) “Equalized valuation without utilities” means the equalized valuation without utilities, as determined by the department of revenue administration, from the second fiscal year preceding the year in which the calculation under this section is made.
(b) “Median household income” shall be as determined by the most recent United States decennial census.
4 State Aid for Educational Adequacy; Subdivision Heading Amended. Amend the subdivision heading immediately preceding RSA 198:38 to read as follows:
State Aid for Educational Adequacy] Grants to Municipalities; Education Trust Fund
5 Distribution Schedule and Appropriation. RSA 198:42 is repealed and reenacted to read as follows:
198:42 Distribution Schedule of Transition Education Grants and Targeted Aid Grants; Appropriation.
I. The grants determined in RSA 198:40 shall be distributed to each municipality’s school district legally responsible for the education of the pupils who attend approved public schools within the district, or in other districts, or who attend approved programs for educationally disabled children, as the case may be, from the education trust fund in 4 payments as follows: 20 percent on August 1, 20 percent on September 1, 30 percent on January 1, and 30 percent on April 1 of each school year; provided that for a dependent school district, the grant determined in RSA 198:40 shall be distributed to the municipality, which shall appropriate and transfer the grant funds to its dependent school department.
II. Beginning July 1, 2005, and every fiscal year thereafter, the amount necessary to fund the grants under RSA 198:40 is hereby appropriated from the education trust fund created under RSA 198:39 to the department. The governor is authorized to draw a warrant from the education trust fund to satisfy the state’s obligation under this section. Such warrant for payment shall be issued regardless of the balance of funds available in the education trust fund. If the balance in the education trust fund, after the issuance of any such warrant, is less than zero, the amount shall be drawn from any funds in the treasury not otherwise appropriated and the commissioner of the department of administrative services shall inform the fiscal committee and the governor and council of such balance. This reporting shall not in any way prohibit or delay the distribution of such grants.
III. The department shall certify the amount of each grant to the state treasurer and direct the payment thereof to the school district. When a payment of a grant is made to a school district, the municipality on whose behalf the payment is made, shall receive notification from the state treasurer of the amount of the payment made to its school district or districts.
6 Maintenance of Local Control. RSA 198:48 is repealed and reenacted to read as follows:
198:48 Maintenance of Local Control. Distributions under RSA 198:42 depend only on the provisions of RSA 198:40, and are independent of how the municipalities decide to spend the distributions or other funds they may raise for education. Notwithstanding any other provision of law, nothing in this subdivision is intended in any way to limit or control how school districts operate or spend their budgets except that grants distributed under RSA 198:42 must be expended for educational purposes within 2 years from the date of receipt.
7 School Attendance; Duty of Parent. Amend RSA 193:1, I(c) to read as follows:
(c) The relevant school district superintendent has excused a child from attendance because the child is physically or mentally unable to attend school, or has been temporarily excused upon the request of the parent for purposes agreed upon by the school authorities and the parent. Such excused absences shall not be permitted if they cause a serious adverse effect upon the student's educational progress. Students excused for such temporary absences may be claimed as full-time pupils for purposes of calculating state aid under RSA 186-C:18 and [
adequate education] grants under RSA [ 198:41] 198:40.
8 Charter and Open Enrollment Schools; Funding. Amend RSA 194-B:11, I to read as follows:
I. There shall be no tuition charge for any pupil attending an open enrollment or charter conversion school located in that pupil’s resident district. Funding limitations in this chapter shall not be applicable to charter conversion or open enrollment schools located in a pupil’s resident district. For any other charter or open enrollment school authorized by the school district, the pupil’s resident district shall pay to such school an amount equal to not less than 80 percent of that district’s average cost per pupil as determined by the department of education using the most recent available data as reported by the district to the department. For any charter school authorized by the state board of education, the pupil’s resident district shall pay tuition beginning July 1, 2004 and every fiscal year thereafter, in an amount per pupil equal to the amount determined in RSA 198:40[
, I] Tuition amounts shall be prorated on a per diem basis for pupils attending a school for less than a full school year. To the extent permitted by law, tuition payments shall coincide with the distribution of [ adequacy] grants under RSA 198:42 or on such other terms as are mutually acceptable.
9 Cooperative School Districts; Certification of District Taxes. Amend RSA 195:14, I(c) to read as follows:
(c) The commissioner of revenue administration shall certify to the state department of education the total amount to be apportioned among the pre-existing school districts. [
Such total shall include the adequate education cost for the district under RSA 198:38, VII, and the amount above the cost of an adequate education to be assessed and collected as local educational taxes.]
10 Cooperative School Districts; State Aid. Amend RSA 195:15 to read as follows:
195:15 State Aid. The [
state aid] grants to which a cooperative elementary and/or secondary district shall be entitled shall be the total of those shares of the aid to which the pupils attending the cooperative district would have entitled the pre-existing districts, had they remained in the pre-existing districts. [ For the purposes of crediting the cooperative district's adequate education cost to the pre-existing districts, each such pre-existing district shall have its adequate education cost under RSA 198:38, VII credited against its share of the cooperative school district budget.] However, cooperative school districts formed by 2 or more pre-existing districts whose boundaries approximate those of a single township in which they are located shall be treated as a single school district for the purposes of this section.
11 Alternative Kindergarten Program. Amend RSA 198:48-a, VII(b) to read as follows:
(b) Once pupils enrolled in an approved alternative kindergarten program have been counted in the average daily membership in residence, school districts shall receive, for each such pupil, [
an adequate education] a grant calculated in accordance with RSA 198:40 [ through RSA 198:42].
12 Alternative Kindergarten Program. Amend RSA 198:48-a, VIII to read as follows:
VIII. Notwithstanding the provisions of this section, alternative kindergarten programs which were approved and in effect prior to April 29, 1999 may continue to operate and shall continue to receive [
per pupil adequate education] grant amounts in accordance with RSA 198:40 [ through RSA 198:42].
13 State Treasurer; Application of Receipts. Amend RSA 6:12, I(b)(65) to read as follows:
(65) Money received under RSA 77-A, RSA 77-E, RSA 78, RSA 78-A, RSA 78-B, RSA 83-F, [
RSA 198:46,] and from the sweepstakes fund, which shall be credited to the education trust fund under RSA 198:39.
14 Repeals. The following are repealed:
I. RSA 21-I:18, I(1), relative to the purchase of services by the department of administrative services for the administration of low and moderate income homeowners property tax relief.
II. RSA 76:3, relative to the education property tax.
III. RSA 76:8, relative to the commissioner’s warrant.
IV. RSA 76:9, relative to the commissioner’s report.
V. 2004, 195:3; and 2004, 200:27, relative to the education property tax.
VI. 2004, 200:16-200:23, relative to contingent applicability.
VII. RSA 83-F:9, relative to exemption from the education property tax.
VIII. RSA 195:14, I(d), relative to cooperative school district’s costs above adequacy.
IX. RSA 198:39, I(g), relative to deposit of excess property tax payments.
X. RSA 198:41, relative to targeted aid.
XI. The subdivision heading immediately preceding RSA 198:46, and RSA 198:46-47, relative to excess education property tax payment and forms.
XII. RSA 198:49, relative to the adequate education and education financing commission.
XIII. RSA 198:56-61, relative to low and moderate income homeowners property tax relief.
15 Effective Date. This act shall take effect July 1, 2005 at 12:02 a.m.
HB 635 FISCAL NOTE
AN ACT relative to education funding.
The Department of Revenue Administration indicates this bill will decrease state education trust fund revenue by $371,302,034 and decrease education trust fund expenditures by $7,400,000 in FY 2006 and each year thereafter. The Department of Education indicates this bill will decrease state education trust fund expenditures and local revenue by $378,845,201 in FY 2006, $386,530,649 in FY 2007, $434,791,530 in FY 2008 and by $437,896,110 in FY 2009. There will be no fiscal impact on county revenue or county and local expenditures.
The Department of Revenue Administration states this bill repeals the statewide property tax and the related low and moderate income homeowners tax relief program. As a result, the statewide property tax receipts will decrease by $370,302,034, the current amount collected, and tax relief payments will decrease by an estimated $7,400,000, the amount paid out in FY 2004.
The Department of Education indicates this bill will reduce the cost of adequacy as shown below.
FY 2006 FY 2007 FY 2008 FY 2009
Statewide Property Tax $371,302,034 $371,302,034 $371,302,034 $371,302,034
Net Grants 488,679,117 497,172,300 548,207,920 553,629,437
Total Cost of Adequacy $859,981,151 $868,474,334 $919,509,954 $924,931,471
Net Grants $481,135,950 $ 481,943,685 $484,718,424 $487,035,361
Statewide Property Tax - - - -
Total Cost of Adequacy $481,135,950 $481,943,685 $484,718,424 $487,035,361
Change in Adequacy $378,845,201 $386,530,649 $434,791,530 $437,896,110
Change in Statewide
Property Tax ($371,302,034) ($371,302,034) ($371,302,034)($371,302,034)
Net Change $ 7,543,167 $ 15,228,615 $ 63,489,496 $ 66,594,076
When determining the fiscal impact, the Department of Education made the following assumptions.
• The technical corrections in the current law relative to the consumer price index were made and the per pupil cost is $3,580.
• All towns receive $1,000 per pupil.
• Transportation expenditures used are for elementary to-and-from and special education for all grades.
• Transportation grants go only to some of the towns that do not receive a preliminary grant.
County median family income has been used for unincorporated places.