HB 606-FN-A-LOCAL – AS INTRODUCED
2005 SESSION
04/09
HOUSE BILL 606-FN-A-LOCAL
AN ACT revising the calculation and distribution of education funding and special education funding.
SPONSORS: Rep. W.P. Campbell, Straf 3
This bill:
I. Establishes an adequate education benchmark for the purpose of determining targeted aid.
II. Sets the per pupil adequate education grant amount at $3,550 for the 2006 fiscal year and requires this amount to be adjusted in each fiscal year.
III. Establishes a new formula for calculating a municipality’s cost of an adequate education.
IV. Establishes an education alternatives fund for the purpose of providing scholarships and loans for pupils who wish to attend nonpublic schools or institutions and to provide loans to individuals or entities interested in establishing new or innovative methods of providing educational services.
V. Establishes a new method for evaluating the cost of special education programs and services required by an individualized education plan.
VI. Provides that all special education costs shall be funded by the state through the newly established special education trust fund, and authorizes the commissioner of the department of revenue administration to impose and collect a tax in any fiscal year in which the moneys in the special education trust fund are insufficient to fund all special education costs statewide.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
05-0068
04/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Five
AN ACT revising the calculation and distribution of education funding and special education funding.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Adequate Education Benchmark Rate. RSA 76:3 is repealed and reenacted to read as follows:
76:3 Adequate Education Benchmark Rate. Beginning July 1, 2005, and every fiscal year thereafter, the commissioner of the department of revenue administration shall determine the adequate education benchmark rate as follows:
I. Multiply the statewide pupil population by the per pupil adequate education grant amount, as adjusted in each fiscal year pursuant to RSA 198:40, to yield the statewide cost of an adequate education.
II. Divide the statewide cost of an adequate education by the statewide equalized valuation, excluding utilities, and multiply the result by 1,000 to yield the adequate education benchmark rate.
III. In this section “pupil population” and “municipality” shall be as defined in RSA 198:38.
2 Persons and Property Taxable; Commissioner’s Warrant. RSA 76:8 is repealed and reenacted to read as follows:
76:8 Commissioner’s Warrant.
I. The commissioner of revenue administration shall annually calculate the cost of an adequate education in a municipality pursuant to RSA 198:40, II.
II. Municipalities are authorized to assess local property taxes, up to the amount of the adequate education benchmark rate calculated in RSA 76:3, necessary to fund the cost of an adequate education in such municipality. Municipalities are further authorized to assess local property taxes necessary to fund school district appropriations in excess of the cost of an adequate education. A municipality shall add the tax rate necessary to fund the cost of an adequate education to the tax rate necessary to fund school district appropriations in excess of the cost of an adequate education to determine the local education tax rate.
III. The commissioner shall issue a warrant under the commissioner’s hand and official seal for the amount computed in paragraph I to the selectmen or assessors of each municipality by December 15 directing them to assess such sum and pay it to the municipality to pay adequate education grant amounts. Such sums shall be assessed at such times as may be prescribed for other taxes assessed by such selectmen or assessors of the municipality.
3 School Money; 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 any public or private school in a municipality.
III. “Pupil” means any child ages 5-18 attending a state approved public or private elementary or secondary school, charter school, or home education program.
IV. “Pupil population” means the number of pupils legally in residence in a municipality, excluding educationally disabled children, as determined by the town clerk as of September 30.
V. “Educationally disabled child” shall be as defined in RSA 186-C:2, I.
4 School Money; Per Pupil Adequate Education Grants; Determination of Adequate Education Costs. RSA 198:40 is repealed and reenacted to read as follows:
198:40 Determination of Adequate Education Costs; Targeted Aid. Beginning July 1, 2005, and every fiscal year thereafter:
I. The per pupil adequate education grant amount shall be $3,550 and shall be adjusted annually according to the northeast region consumer price index, as determined by the Bureau of Labor Statistics, United States Department of Labor.
II. The municipality’s cost of an adequate education shall be determined as follows:
(a) Multiply the municipality’s total equalized valuation, excluding utilities, by the adequate education benchmark rate as established in RSA 76:3.
(b) Multiply the municipality’s pupil population by the per pupil adequate education grant amount and subtract the result from the amount obtained in subparagraph (a).
(c) If the result obtained in subparagraph (b) is zero or greater, the municipality shall receive no targeted aid.
(d) If the result obtained in subparagraph (b) is less than zero, the municipality shall receive targeted aid in an amount sufficient to cause the result obtained in subparagraph (b) to equal zero.
III. In each fiscal year, the full amount of targeted aid under this section shall be paid from the education trust fund established in RSA 198:39.
IV. Municipalities shall be permitted to retain not more than $50 per pupil from the per pupil adequate education amount established in paragraph I for administrative expenses.
5 School Money; Education Alternatives Fund Established. RSA 198:41 is repealed and reenacted to read as follows:
198:41 Education Alternatives Fund.
I. There is hereby established an education alternatives fund in the department of education. The purpose of this fund is to provide scholarships and loans for pupils who wish to attend nonpublic schools or institutions, and to provide loans to individuals or entities interested in establishing new or innovative methods of providing educational services. This fund shall be nonlapsing and administered by the commissioner of the department of education.
II. Beginning July 1, 2006, and every fiscal year thereafter, a municipality shall annually vote on the following apportionment of the per pupil adequate education grant amount as established by the legislature for each pupil who does not attend a public school:
(a) Sixty percent to be distributed to the parent or legal guardian of each pupil not attending a public school. Such payment shall be in the form of a check which shall be made payable to the nonpublic school or institution designated by the parent or legal guardian.
(b) Twenty percent to be distributed to the school district of the municipality in which the pupil resides.
(c) Twenty percent to remain in the education alternatives fund to provide a financial basis for further growth and investment in accordance with the purpose and objectives of the fund.
III. A municipality which does not adopt the apportionment of per pupil adequate education grant money as set forth in paragraph II, shall deposit into this fund 100 percent of the per pupil adequate education grant amount, as established by the legislature, for each pupil residing in such municipality who does not attend a public school, provided that such municipality may, by a simple majority, vote to deposit additional moneys into this fund.
6 School Money; Distribution of Targeted Aid. RSA 198:42 is repealed and reenacted to read as follows:
198:42 Distribution Schedule of Targeted Aid; Appropriation.
I. The targeted aid amount determined in RSA 198:40 shall be distributed to each municipality which shall distribute such aid to the municipality’s school district or districts legally responsible for the education of the pupils who attend approved public schools within the districts or in other districts, 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 targeted aid amount determined in RSA 198:40 shall be distributed to the municipality, which shall appropriate and transfer the funds to its dependent school department.
II. For the fiscal year beginning July 1, 2005, and every fiscal year thereafter the amount necessary to fund the targeted aid amounts under RSA 198:40 is hereby appropriated from the education trust fund created under RSA 198:39 to the department of education. 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 targeted aid amounts.
III. The department of education shall certify the targeted aid amount to the state treasurer and direct the payment thereof to the municipality which shall direct adequate education payments to the municipality’s public school district or districts which the pupil attends. If the child does not attend a public school in the district of residence, the municipality shall direct the per pupil amount to the education alternatives fund as provided in RSA 198:41.
7 Special Education; Individualized Education Plans. RSA 186-C:7 is repealed and reenacted to read as follows:
186-C:7 Individualized Education Plans.
I.(a) The development of an individualized education plan for each educationally disabled child shall be the responsibility of the school district in which the child resides and the parents or legal guardian of such child.
(b) The parents or legal guardian of an educationally disabled child have the right to participate in the development of the individualized education plan for the child and to appeal decisions of the division of education improvement regarding such child’s individualized education plan as provided in rules adopted in accordance with RSA 541-A by the state board of education.
(c) The division of educational improvement of the department of education shall assist each school district in developing an approved program or programs for educating the educationally disabled children of the district including the setting of approved rates for private providers of special education services pursuant to RSA 21-N:5, I(h).
II. Each individualized education plan shall be submitted to the division of educational improvement of the department of education for evaluation and cost analysis in accordance with the following rating schedule which includes the amount of annual state funding at each level for an individualized education plan:
Level 1 $ 5,000
Level 1.1 $ 6,000
Level 1.2 $ 7,000
Level 1.3 $ 8,000
Level 1.4 $ 9,000
Level 2` $10,000
Level 2.1 $11,000
Level 2.2 $12,000
Level 2.3 $13,000
Level 2.4 $14,000
Level 3 $15,000
Level 3.1 $16,000
Level 3.2 $17,000
Level 3.3 $18,000
Level 3.4 $19,000
Level 4 actual cost based on placement
III. The division of educational improvement personnel involved in the cost analysis of individualized education programs shall issue a written summary of its findings to the parents or legal guardians of the child involved detailing the basis for the cost analysis and the rating assigned.
IV.(a) The state shall be responsible for the full cost of special education programs and services in an individualized education plan approved under this section and all such costs shall be paid from the special education trust fund established in RSA 186-C:18.
(b) Payment from the special education trust fund shall be made directly to the provider of special education programs and services based on the rating schedule set forth in this section, for the amount of approved costs under an individualized education plan. If the actual costs of special education programs and services are less than the amount approved under the rating schedule set forth in this section, the provider of special education programs and services shall remit any overpayment for actual costs to the special education trust fund. Any costs in excess of the amount approved under the rating schedule shall be the responsibility of the parent or legal guardian.
(c) A parent or legal guardian shall have final decision-making authority regarding which special education programs or services best meet the needs of his or her child.
V. Any surplus funds remaining in the special education trust fund after payment for all special education programs and services as set forth in this section shall be transferred to the education alternatives fund established in RSA 198:41.
8 Special Education; Responsibility of School District. Amend RSA 186-C:10 to read as follows:
186-C:10 Responsibility of School District. A school district [shall] may establish an approved program [or programs] for educationally disabled children, or shall enter into cooperative agreements with other districts to provide approved programs for educationally disabled children[, or shall pay tuition to such an approved program maintained by another school district or by a private organization Eligibility for]. Participation in an approved program of special education shall be determined by the school board of the school district under rules adopted by the state board of education.
9 Special Education; Liability for Expenses. RSA 186-C:13 is repealed and reenacted to read as follows:
186-C:13 Liability for Expenses. All court ordered placement expenses for a child adjudicated under RSA 169-B, 169-C, or 169-D shall be paid from the special education trust fund established in RSA 186-C:18.
10 Special Education; Special Education Trust Fund. RSA 186-C:18 is repealed and reenacted to read as follows:
186-C:18 Special Education Trust Fund.
I. The state board of education through the commissioner, department of education, shall distribute aid available under this section to a parent or legal guardian who has an educationally disabled pupil for whose costs the parent or legal guardian is responsible, and shall direct such funds to the provider of special education programs and services. Such payment shall be in the form of a check which shall be made payable to and sent to the provider of special education programs and services. Each provider of special education programs and services shall provide the department of education with a list of all children enrolled in such provider’s programs or services.
II.(a) A special education trust fund is hereby established in the department of education and shall be administered by the commissioner of the department of education. The purpose of this fund is to provide funding for special education programs and services which have been approved in the individualized education plan as provided in RSA 186-C:7. This fund shall be nonlapsing and moneys in this fund shall not be used for any purpose other than to distribute funding for special education programs and services approved in an individualized education plan in accordance with RSA 186-C:7 and to fund the education alternatives fund as provided in RSA 186-C:7.
(b) Each fiscal year, the commissioner of the department of education shall deposit into the special education trust fund:
(1) All federal special education moneys received by the state.
(2) All state moneys appropriated for the purpose of funding special education programs and services or reimbursements for special education programs and services.
(3) All amounts remaining in the education trust fund under RSA 198:39 as of June 30 in each fiscal year, except for any targeted aid payments yet to be made as of June 30 of the fiscal year.
III. For the fiscal year beginning July 1, 2005, and every fiscal year thereafter the amount necessary to fund special education programs and services statewide under RSA 186-C is hereby appropriated from the special education trust fund created under RSA 186-C:18 to the department of education. The governor is authorized to draw a warrant from the special 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 special education trust fund. If the balance in the special 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 targeted aid amounts.
IV. In addition to the adequate education benchmark set forth in RSA 76:3, in any fiscal year where the amount of the special education trust fund is insufficient to provide full funding for special education programs and services in all individualized education plans approved in such fiscal year under RSA 186-C:7, the commissioner of the department of revenue administration is authorized to impose and collect in each municipality an additional amount per $1,000 of the value of taxable property on all persons and property taxable pursuant to RSA 72 and RSA 73, except property subject to tax under RSA 82 and RSA 83-F, sufficient to provide full funding for all special education programs and services in all individualized education plans approved in such fiscal year under RSA 186-C:7.
V. Unexpected special education costs incurred by a school district which are eligible for reimbursement from the state pursuant to RSA 186-C:18, III and which could not be identified prior to the adoption of the local district budget shall be exempt from the provisions of RSA 32:8, RSA 32:9, and RSA 32:10.
11 School Money; Education Trust Fund. Amend the introductory paragraph of RSA 198:39 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] targeted aid to municipalities’ school districts pursuant to RSA [198:42, and] 198:40, to provide low and moderate income homeowners property tax relief under RSA 198:56-198:61, and for distribution to the special education trust fund established in RSA 186-C:18. The state treasurer shall deposit into this fund immediately upon receipt:
12 Cooperative School Districts; Certification of District Taxes. RSA 195:14, I(c)-(d) are repealed and reenacted 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 municipalities in the cooperative school district which shall include the adequate education cost for the district under RSA 198:40, and the amount above the cost of an adequate education to be assessed and collected as local educational taxes. Such amounts shall be calculated as follows:
(1) Add the amounts received by each preexisting school district for adequate education costs under RSA 198:40, and for educationally disabled children from the special education trust fund under RSA 186-C:18, and subtract this sum from the amount approved in the cooperative school district budget for local educational expenses.
(2) The remaining amount shall be raised by a local education tax. The commissioner of revenue administration shall determine the proportional share of the costs above adequacy to be assessed in each preexisting district as a local education tax.
(d) Targeted aid grants shall be distributed to the municipality in the cooperative school district which shall forward the funds to the preexisting school district.
13 Cooperative School Districts; State Aid. Amend RSA 195:15 to read as follows:
195:15 State Aid. The state aid 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] municipality, had [they remained in the pre-existing districts] the municipality not become part of a cooperative school district. For the purposes of crediting the cooperative district’s adequate education cost to [the pre-existing districts, each such pre-existing district] a municipality, each such municipality shall have its adequate education cost under RSA [198:38, VII] 198:40 credited against its share of the cooperative school district budget. However, cooperative school districts formed by 2 or more [pre-existing districts] municipalities 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.
14 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.
15 Low and Moderate Income Homeowners Property Tax Relief. Amend RSA 198:57, III(a) to read as follows:
(a) Owns a homestead or interest in a homestead subject to the [education property tax] adequate education benchmark rate in RSA 76:3;
16 Low and Moderate Income Homeowners Property Tax Relief. Amend the introductory paragraph to RSA 198:57, IV to read as follows
IV. All or a portion of an eligible tax relief claimant's [state education property taxes,] tax due under RSA 76:3, shall be rebated as follows:
17 Low and Moderate Income Homeowners Property Tax Relief. Amend RSA 198:57, IV(c) to read as follows:
(c) Multiply the lesser of the amount determined in subparagraph (a) or (b) by the current [state education property tax rate] adequate education benchmark rate as shown on the tax bill under RSA 76:11-a;
18 Repeal. The following are repealed:
I. 2004, 200:2, relative to education property tax effective July 1, 2005.
II. 2004, 200:6, relative to per pupil adequacy effective July 1, 2005.
III. 2004, 200:7, relative to per pupil adequacy cost and consumer price index adjustments effective July 1, 2005.
IV. 2004, 200:16-200:23, relative to contingent applicability.
V. RSA 198:39, I(g), relative to deposit of excess property tax payments.
VI. RSA 198:46-47, relative to excess education property tax payments and forms for such payments.
VII. RSA 198:49, relative to the adequate education and education financing commission.
19 Effective Date. This act shall take effect July 1, 2005 at 12:02 a.m.
LBAO
05-0068
Revised 2/8/05
HB 606 FISCAL NOTE
AN ACT revising the calculation and distribution of education funding and special education funding.
FISCAL IMPACT:
The Department of Revenue Administration indicates this bill will decrease education trust fund revenue by $371,302,034 and state education trust fund expenditures by $7,400,000 in FY 2006 and each year thereafter. The Department of Education indicates this bill will have an indeterminable fiscal impact on state restricted revenue, state education trust fund expenditures and local revenue and expenditures in FY 2006 and each year thereafter. There will be no fiscal impact on county revenue or expenditures.
METHODOLOGY:
This bill repeals the statewide property tax and makes changes to adequate education funding and special education funding.
Statewide Property Tax
This bill repeals the statewide property tax which will reduce state education trust fund revenue by $371,302,034 each year. The related low and moderate income homeowners property tax relief program will no longer apply, and therefore, state education trust fund expenditures will decrease by $7.4 million per year.
Adequate Education Funding
This bill establishes the adequate education benchmark, and instructs the Department of Revenue Administration to set the benchmark at an amount sufficient to produce a sum equal to the following: Total pupils, including those in private schools and excluding those with disabilities, times the per pupil adequate education grant amount, which in FY 2006 will be $3,550. The per-pupil amount will increase by CPI each year after FY 2006.
A school district’s grant will equal the benchmark times equalized valuation per thousand, minus (the district’s total pupils times the per-pupil adequate education grant amount.)
Each municipality may retain $50 per pupil from the state grant for administrative costs.
This bill establishes a non-lapsing education alternatives fund in the Department of Education for the purpose of providing scholarships and loans to pupils who wish to attend non-public schools or institutions, and loans to individuals or entities interested in establishing new or innovative methods of providing educational services.
This bill requires a municipality to vote annually on an apportionment of the per pupil adequate education grant amount attributable to the municipality’s pupils who do not attend a public school. The municipality must vote to pay sixty percent of the amount to parents of each pupil not attending a public school, twenty percent to the district and the remaining twenty percent to the education alternatives fund. A municipality which does not adopt the apportionment must deposit 100% of the amount in the fund.
The Department of Education assumed the following when estimating this part of the bill.
• Since enrollment by town is not collected by the Department, the Department used ADM-R and October 1 enrollment by district to estimate enrollment and used a percentage increase, 17%, to estimate non public school students. Enrollment will remain steady from FY 2006 to FY 2009.
• The Department assumes all non public school pupils will be included in the district distribution.
• CPI index is 2.8%.
• The benchmark calculation equals $5.70 per thousand.
• The town administrative assessment of $50 per pupil will total $7.5 million.
• The technical corrections in the current education funding law relative to the consumer price index were made and the per pupil cost is $3,580.
The Department estimates that the change in education formula, the requirement for the districts to send a portion of the grant amount attributable to the municipality’s pupils who do not attend a public school to the state education alternatives fund, will result in an increase in state revenue of $17 million in FY 2006, $17 million in FY 2007, $18 million in FY 2008 and $18 million in FY 2009. Also, the change in formula will result in a decrease in state education trust fund expenditures and local revenue of $366.5 million in FY 2006, $373 million in FY 2007, $392 million in FY 2008 and $388 million in FY 2009. Also, the Department estimates the requirement that the municipality vote to pay 60% of the grant amount attributable to the municipality’s pupils who do not attend a public school, to the parents of those children and, 20% to the state’s education alternatives fund will, increase local expenditures by $68 million in FY 2006, $69 million in FY 2007, $72 million in FY 2008 and $73 million in FY 2009.
Special Education
The Department did not estimate the fiscal impact of the changes to the special education law. The Department indicates the Individuals with Disabilities Act requires students who are identified as needing special education services are to be provided a free and appropriate education, that is, an education provided at public expense, under public supervision and without charge. The Department indicates the provision in this bill to set limits on the cost of a free and appropriate education is contrary to federal and state law. Also, the individual education plan is developed by the school district’s team, which includes the parents and thus the state cannot develop it. To set levels with costs associated with them based on the development of an individual education plan is contrary to federal and state law according to the Department.