HB 1695-FN – AS INTRODUCED
2006 SESSION
04/09
HOUSE BILL 1695-FN
AN ACT defining an adequate education and relative to calculating the cost of an adequate education and adequate education grants.
SPONSORS: Rep. Asselin, Rock 7; Rep. Weyler, Rock 8; Rep. Dunn, Ches 3; Rep. Naro, Graf 7; Rep. Carson, Rock 3
This bill:
I. Defines an adequate education and identifies a method for identifying the cost of an adequate education.
II. Establishes a formula for distributing adequate education grant money to school districts and charter schools.
III. Increases the rebate offered through the low and moderate income homeowners property tax relief program.
IV. Is contingent upon the enactment of the Education Funding Act of 2006.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
06-2052
04/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Six
AN ACT defining an adequate education and relative to calculating the cost of an adequate education and adequate education grants.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Adequate Public Education; Criteria for an Adequate Education. Amend the introductory paragraph of RSA 193-E:2 to read as follows:
193-E:2 Criteria for an [Equitable] Adequate Education. An [equitable] adequate education shall provide all students with the opportunity to acquire:
2 New Section; Adequate Public Education; Definition of Adequate Education and Adequate Education Costs. Amend RSA 193-E by inserting after section 2 the following new section:
193-E:2-a Definition of Adequate Education.
I. In a fiscal year, an adequate education shall include the following:
(a) The sum total of a school district’s expenditures for:
(1) Regular course instruction.
(2) Special education.
(3) Pupil guidance.
(4) Psychological guidance.
(5) Speech and hearing pathology.
(6) English proficiency.
(7) Physical therapy.
(8) Occupational therapy.
(9) State-required pupil assessment.
(b) From the sum total in paragraph I, subtract:
(1) Teacher assistant and substitute teacher salaries.
(2) Professional services.
(3) New equipment, including computer equipment.
(4) Professional dues and fees.
(5) Professional meeting costs.
(6) Driver education instructor salaries.
(7) Driver education costs.
(8) Travel expenses.
(9) Vocational salaries and costs.
(10) Teacher training.
(11) Kindergarten costs.
(12) Preschool costs.
(13) Bilingual education.
II. To determine the adequate education grant, from the amount remaining in paragraph II, subtract:
(a) All federal and state education moneys disbursed to schools.
(b) Statewide adequate education property tax revenues raised within a school district.
(c) From the school district providing education services, adequate education costs for pupils who receive education services in a school district other than the pupil’s resident school district.
III. The department of education shall use the most recently submitted school district balance sheet, currently known as the DOE-25 report, as the basis for calculating the cost of an adequate education.
IV. A charter school established under RSA 194-B shall submit its expense report annually to the department of education.
3 School Money; Definitions. RSA 198:38 is repealed and reenacted to read as follows:
198:38 Definitions. In this subdivision:
I. “Average annual rate of inflation” means average annual percentage rate of inflation based on the northeast region consumer price index for all urban consumers as published by the Bureau of Labor Statistics, United States Department of Labor, for the 4 calendar years ending 18 months before the beginning of the fiscal year for which aid is to be determined.
II. “Average daily membership in residence” or “ADMR” means the average daily membership in residence of pupils in kindergarten through grade 12, as defined in RSA 189:1-d, IV of the second school year preceding the year in which the calculation is made, provided that no kindergarten pupil shall count as more than 1/2 day attendance per calendar day.
III. “Charter school” means a charter school established under RSA 194-B.
IV. “Commissioner” means the commissioner of the department of education.
V. “Department” means the department of education.
VI. “Educationally disabled child” or “educationally disabled pupil” means the average daily membership in residence of educationally disabled children as defined in RSA 186-C:2, I.
VII. “Municipality” means a city, town, or unincorporated place.
VIII. “School district” means a school district as defined in RSA 194:1 or a cooperative school district as defined in RSA 195:1.
4 School Money; Education Trust Fund. The introductory paragraph of RSA 198:39, I is repealed and reenacted to read 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 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:
5 School Money; Adequate Education Grants. RSA 198:40-42 are repealed and reenacted to read as follows:
198:40 Adequate Education Grants.
I.(a) Beginning in the 2008 fiscal year, and every fifth fiscal year thereafter, the commissioner shall, for each school district or charter school, calculate the adequate education grant amount based on the definition of an adequate education set forth in RSA 193-E:2-a, and shall make adequate education grant payments directly to the school district or charter school. Beginning in the 2008 fiscal year, and every fifth fiscal year thereafter, the commissioner shall, for each school district or charter school, calculate a per pupil adequate education grant amount by dividing the amount of adequate education grants for non-special education categories distributed in the school district or charter school by the average daily membership in residence in such school district or charter school. The commissioner shall also calculate a per pupil adequate education grant amount for special education categories by dividing the amount of adequate education grants for special education categories, including costs for special education instruction, psychological guidance, speech and hearing pathology, physical therapy, and occupational therapy, as adjusted according to RSA 193-E:2-a, I(b) and distributed in the school district or charter school by the average daily membership in residence of educationally disabled pupils in such school district or charter school.
(b) For each of the intervening fiscal years, the commissioner shall:
(1) Adjust a school district’s or charter school’s adequate education grant amount by the average annual rate of inflation;
(2) Adjust a school district’s or charter school’s adequate education grant amount by determining any change in the average daily membership in residence from the previous fiscal year by multiplying the per pupil adequate education grant for non-special education categories amount by the change in the average daily membership in residence from the previous fiscal year, and increasing or decreasing the adequate education grant amount by such amount; and
(3) Adjust a school district’s or charter school’s adequate education grant for special education categories amount by determining any change in the average daily membership in residence of educationally disabled children from the previous fiscal year by multiplying the per pupil adequate education grant for special education categories amount by the change in the average daily membership in residence from the previous fiscal year, and increasing or decreasing the adequate education grant amount by such amount.
II.(a) Adequate education grant moneys shall be used only for a school district’s or charter school’s education expenses and shall not be applied directly or indirectly to the reduction of a municipality’s property tax rate.
(b) The commissioner shall make adequate education grant payments directly to the school district or charter school in accordance with RSA 198:42.
III. Any changes to the amount of a school district’s or charter school’s adequate education grant shall be made after school districts or charter schools have adopted their annual budgets.
IV. In this section, “non-special education categories” means the cost of regular course instruction, pupil guidance, and English proficiency as adjusted pursuant to RSA 193-E:2-a, I(a).
198:41 Adequate Education Grant Audits.
I. Annually, the commissioner shall conduct random audits of the DOE-25 reports provided by school districts and expense reports submitted by charter schools, to monitor the accuracy of adequate education grant calculations and the annual costs used to calculate the grant. The commissioner shall audit a minimum of 20 percent of school districts and charter schools each year.
II. If the audit determines that a school district’s or charter school’s adequate education grant was greater than it should have been for the fiscal year, the department shall, in the next fiscal year, reduce the school district’s or charter school’s adequate education grant by the amount of the excess.
198:42 Grant Distribution Schedule; Appropriation.
I. The grant determined in RSA 198:41 shall be distributed to each municipality’s school district or to a charter school, from the education trust fund in 4 payments of 20 percent on September 1, 20 percent on November 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 198:41 shall be distributed to the municipality, which shall appropriate and transfer the grant funds to its dependent school department.
II. For the fiscal year beginning July 1, 2007, and every fiscal year thereafter, the amount necessary to fund the grants under RSA 198:41 is hereby appropriated to the department from the education trust fund created under RSA 198:39. 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 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 equitable education grants.
III. The department of education shall certify the amount of each grant to the state treasurer and direct the payment thereof to the school district or charter school. 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 School Money; Low and Moderate Income Homeowners Property Tax Relief. Amend RSA 198:57, IV to read as follows:
IV. All or a portion of an eligible tax relief claimant’s [state] statewide adequate education property [taxes,] tax under RSA 76:3, shall be rebated as follows:
(a) Multiply the total local assessed value of the claimant’s property by the percentage of such property that qualifies as the claimant’s homestead;
(b) [Multiply $100,000 by the most current local equalization ratio as determined by the department of revenue administration;
(c)] Multiply the [lesser of the] amount determined in subparagraph (a) [or (b)] by 4 times the current state education property tax rate as shown on the tax bill under RSA 76:11-a up to a maximum of the statewide adequate education property tax rate established in RSA 76:3;
[(d)] (c) Multiply the product of the calculation in subparagraph [(c)] (b) by the following percentage as applicable to determine the amount of tax relief available to the claimant:
(1) If a single person and total household income is:
(A) less than $12,500, 100 percent;
(B) $12,500 but less than $15,000, 60 percent;
(C) $15,000 but less than $17,500, 40 percent; or
(D) $17,500 but less than or equal to $20,000, 20 percent.
(2) If a head of a New Hampshire household or a married person and total household income is:
(A) less than $25,000, 100 percent;
(B) $25,000 but less than $30,000, 60 percent;
(C) $30,000 but less than $35,000, 40 percent; or
(D) $35,000 but less than or equal to $40,000, 20 percent.
[(e)] (d) The amount determined by subparagraph (d) is the allowable tax relief in any year.
7 Department of Education; Balance Sheet. The DOE-25 report for 2004-2005 shall be the basis for calculating the cost of an adequate education for the fiscal year ending June 30, 2008.
8 Applicability. The general court intends that the provisions of this act are contingent upon the enactment of the Education Funding Act of 2006.
9 Effective Date. This act shall take effect July 1, 2007.
LBAO
06-2052
Revised 1/17/06
HB 1695 FISCAL NOTE
AN ACT defining an adequate education and relative to calculating the cost of an adequate education and adequate education grants.
FISCAL IMPACT:
The Department of Education indicates this bill will increase state education trust fund expenditures and local revenue by $177,055,473 in FY 2008, $197,260,953 in FY 2009, and $189,386,085 in FY 2010. State general fund expenditures will increase by $186,347 in FY 2008, $191,937 in FY 2009 and $197,695 in FY 2010. The Department of Revenue Administration indicates this bill will increase state education trust fund expenditures by $10,336,000 in FY 2007 and by similar amounts in each year thereafter. There will be no impact on county revenue and expenditures or local expenditures.
METHODOLOGY:
The Department of Revenue Administration indicates this bill will increase expenditures by increasing low and moderate-income homeowner’s property tax relief rebates to a maximum of $15,336,000 in FY 2007, or $10,336,000 more than the $5,000,000 rebates made for FY 2005. The Department assumes the 25,513 claimants eligible in FY 2005 would be eligible in FY 2007 for the maximum payment assumed to be $601.09 based on a median housing value calculated at $239,000 multiplied by the $2.515 per $1,000 statewide enhanced education tax rate. The Department did not project beyond FY 2007.
The Department of Education assumed the following when estimating the fiscal impact of this bill:
• The calculations were made using one state total rather than individually by district as required by this bill. This legislation requires an adequate education grant be calculated for each district.
• Educational services provided by federal funds have been excluded from the cost of an adequate education as have the federal dollars used to fund those services.
• The Department does not currently collect all data necessary to accurately perform parts of the calculation; therefore, estimates were made by the Department using best data available.
• The Department will require two additional positions to adequately manage this legislation as follows:
FY 2007
Labor grade 33, Step 5 $ 68,776
Labor grade 29, Step 5 56,862
Benefits @ 44%: 55,281
Total $180,919
These amounts are increased by 3% inflation to estimate the salary and benefit costs at $186,347 for FY 2008, $191,937 for FY 2009 and $197,695 for FY 2010.
• The amount distributed to each district will be adjusted each year by the rate of inflation and ADM-R change.
• Adequate education grants will be paid directly to the school districts.
The cost of educational adequacy and the changes in adequate education grants and tax revenue are shown below.
FY 2008 FY 2009 FY 2010
Proposed Formula
Cost of Adequate Education $1,186,866,700 N/A N/A
Less: Deductions 481,811,227 N/A N/A
Adequate Education Grants $ 705,055,473 $725,260,953* $744,386,085*
Current State Grants
Current State Aid formula $ 528,000,000 $528,000,000 $555,000,000
Increase in Expenditures $ 177,055,473 $197,260,953 $189,386,085
Additional DOE Staffing 186,347 191,937 197,695
Increase in Cost per DOE $ 177,241,820 $197,452,890 $189,583,780
*The Department indicated that under this bill, the cost of an adequate education will only be calculated once every five years and the adequate education grants will be adjusted annually using inflation and ADM-R. A 3% rate was used in the above estimate.