HB 614-FN-A-LOCAL – AS INTRODUCED
2005 SESSION
04/10
HOUSE BILL 614-FN-A-LOCAL
AN ACT providing for state funding of the statewide average education cost per pupil.
This bill:
I. Sets the statewide education property tax at $2 per $1,000 of value.
II. Establishes a new formula for determining the cost of education by adding to the average daily membership in residence in each school district a percentage of the average daily membership in residence of special education pupils, free or reduced-price lunch pupils, English as a second language pupils, and adding the cost of transportation.
III. Provides for the distribution of education tax limit grants which are provided to municipalities where the cost of an adequate education exceeds the amount received by that municipality from the statewide education property tax.
IV. Provides transition grants which guarantee each municipality receives at least 90 percent of the difference between the total education tax limit grant to which a municipality is entitled in the current fiscal year and the total education grant amounts received by the municipality in the immediately preceding fiscal year.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
05-0144
04/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Five
AN ACT providing for state funding of the statewide average education cost per pupil.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Statement of Purpose; Legislative Findings. The general court finds that the present system of providing adequate education grants to support public elementary and secondary education does not sufficiently serve the objective of equalizing educational opportunity in the state, does not efficiently direct state resources to school districts based on fiscal need, and does not encourage frugality. The purpose of this act is to direct state school aid more efficiently and effectively based on the relative fiscal need of local communities, and so better serve the objective of equalizing educational opportunity for pupils in the state’s public elementary and secondary schools. The general court also recognizes the inherent imprecision and subjectivity involved in determining the cost of providing the opportunity for an adequate education. In the exercise of its constitutional authority and discretion, to provide the opportunity for pupils to obtain an adequate education, the general court has adopted an average costing methodology.
2 Education Property Tax; Rate Reduced. RSA 76:3 is repealed and reenacted to read as follows:
76:3 Education Property Tax. An annual education property tax at the uniform rate of $2 on each $1,000 of the value of taxable property is hereby imposed 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.
3 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] moneys under RSA 198:42 or on such other terms as are mutually acceptable.
4 Charter and Open Enrollment Schools; Funding. Amend RSA 194-B:11, IX(a) to read as follows:
IX.(a) The pupil’s resident school district or department of education shall pay tuition in cash or may issue reimbursement anticipation notes as set forth in RSA 198:20-d for each year in which a resident pupil attends a charter school. Unless otherwise agreed upon, cash payment shall coincide with the distribution schedule [for grant payment] set forth in RSA 198:42. The reimbursement anticipation note shall be in the amount specified for the year of attendance at the charter school, and shall be issued to the charter school prior to the beginning of the school year of the charter school. Each reimbursement anticipation note issued shall be for a term of 3 years from the date of issue or may be redeemable by the charter school at such time as the charter school or the pupil’s resident school district receives [adequate education grant amounts] moneys disbursed pursuant to RSA 198:42.
5 Cooperative School Districts; Certification of District Taxes. Amend RSA 195:14, I (d)(4) to read as follows:
(4) If the amount determined in subparagraph (2) for any pre-existing district is less than zero, the department shall reduce the [adequate education grant] amount payable to the cooperative district under RSA 198:42 by the difference between the amount determined in subparagraph (1) and the pre-existing district’s adequate education cost under RSA 198:38, VII.
6 School Money; Education Trust Fund. Amend the introductory paragraph to RSA 198:39, I 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] moneys 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:
7 School Money; Determination of Average Education Cost. RSA 198:40 is repealed and reenacted to read as follows:
198:40 Determination of Average Education Cost.
I. For the fiscal year beginning July 1, 2005, and every fiscal year thereafter, the cost per elementary pupil shall be equal to the statewide average cost per elementary pupil as reported by the department of education for the most recent year available; and cost per high school pupil shall be equal to the statewide average cost per high school pupil as reported by the department of education for the most recent year available.
II. For each school year, the statewide cost of average education for all pupils shall be calculated by multiplying the cost per elementary pupil by the sum of the following: the statewide average daily membership in residence of elementary pupils, 1/4 of the statewide average daily membership in residence of elementary special education pupils, 1/4 of the statewide average daily membership in residence of elementary pupils receiving free or reduced-price lunches, and 1/4 of the statewide average daily membership in residence of elementary pupils receiving education in English as a second language; adding to that product the result of multiplying the cost per high school pupil by the sum of the following: the statewide average daily membership in residence of high school pupils, 1/4 of the statewide average daily membership in residence of high school special education pupils, 1/4 of the statewide average daily membership in residence of high school pupils receiving free or reduced-price lunches, and 1/4 of the statewide average daily membership in residence of high school pupils receiving education in English as a second language; and adding to that sum, the statewide cost of pupil transportation for elementary school pupils.
III. For each school year, each municipality’s cost of an average education for its pupils shall be calculated by multiplying the cost per elementary pupil by the sum of the following: the municipality’s average daily membership in residence of elementary pupils, 1/4 of the municipality’s average daily membership in residence of elementary special education pupils, 1/4 of the municipality’s average daily membership in residence of elementary pupils receiving free or reduced-price lunches, and 1/4 of the municipality’s average daily membership in residence of elementary pupils receiving education in English as a second language; adding to that product the result of multiplying the cost per high school pupil by the sum of the following: the municipality’s average daily membership in residence of high school pupils, 1/4 of the municipality’s average daily membership in residence of high school special education pupils, 1/4 of the municipality’s average daily membership in residence of high school pupils receiving free or reduced-price lunches, and 1/4 of the municipality’s average daily membership in residence of high school pupils receiving education in English as a second language; and adding to that sum, the municipality’s cost of transportation for elementary school pupils.
8 School Money; Tax Limit Grants. RSA 198:41 is repealed and reenacted to read as follows:
198:41 Education Tax Limit Grants. For each school year, a municipality shall retain documentation of amounts received under the statewide education property tax up to the amount determined as that municipality’s cost of average education. Receipts above that amount shall be remanded to the state. If the amount received under the statewide education property tax is insufficient to fund the cost of average education in such municipality, the state shall provide an education tax limit grant to such municipality sufficient to reduce the local education tax rate necessary to provide the remainder of that cost to a rate no higher than that which the statewide average of such tax rates would be if no grants were distributed.
9 New Section; School Money; Transition Grants. Amend RSA 198 by inserting after section 41 the following new section:
198:41-a Transition Grants. Beginning July 1, 2005, and every fiscal year thereafter, the state will provide an additional education transition grant to each municipality for which the average education tax limit grant is less than the municipality received in education grants for the prior fiscal year. The amount of the transition grant shall be 90 percent of the difference between the education tax limit grant to which a municipality is entitled in the current fiscal year and the total education grants amount received by the municipality in the immediately preceding fiscal year.
10 School Money; Distribution Schedule. Amend RSA 198:42 to read as follows:
198:42 Distribution Schedule [of Adequate Education Grant]; Appropriation.
I. [The adequate education grant determined in RSA 198:41] All amounts determined under this subdivision shall be distributed to each municipality’s school district or districts 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 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] amount determined under this subdivision 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, 2004, and every fiscal year thereafter the amount [necessary to fund the grants under RSA 198:41] determined under this subdivision 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 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 adequate education grants.
III. The department of education shall certify the amount [of each grant] determined under this subdivision 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.
11 Repeals. The following are repealed:
I. 2004, 195:3, relative to the education property tax.
II. 2004, 200:16-200:25, relative to contingent applicability and the consumer price index adjustment.
III. RSA 198:49, relative to the adequate education and education financing commission.
12 Effective Date. This act shall take effect July 1, 2005 at 12:02 a.m.
LBAO
05-0144
Revised 2/7/05
HB 614 FISCAL NOTE
AN ACT providing for state funding of the statewide average education cost per pupil.
FISCAL IMPACT:
The Department of Revenue Administration indicates this bill will decrease state education trust fund revenue by $115,323,509 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 $199,171,044 in FY 2006, $201,412,617 in FY 2007, $247,030,914 in FY 2008, and $245,595,480 in FY 2009. There will be no fiscal impact on county revenue and county and local expenditures.
METHODOLOGY:
The Department of Revenue Administration indicates this bill establishes a statewide property tax rate of $2 per thousand. This rate will raise $255,978,527 compared to $371,302,036, which is the amount raised currently, resulting in a reduction in state education trust fund revenue of $115,323,509. The change in the distribution formula will change the grants as shown below.
Current Law FY 2006 FY 2007 FY 2008 FY 2009
Net Grants $488,679,117 $497,172,300 $548,376,191 $555,332,286
Statewide Property Tax 371,302,036 371,302,036 371,302,036 371,302,036
Cost of Adequacy $859,981,153 $868,474,336 $919,678,227 $926,634,322
Proposed Bill
Net Grants $404,831,582 $411,083,192 $416,668,786 $425,060,315
Statewide Property Tax 255,978,527 255,978,527 255,978,527 255,978,527
Cost of Adequacy $660,810,109 $667,061,719 $672,647,313 $681,038,842
Reduction in ETF
Expenditures $199,171,044 $201,412,617 $247,030,914 $245,595,480
Reduction in ETF
SWPT revenue (115,323,509) (115,323,509) (115,323,509) (115,323,509)
Net difference $ 83,847,535 $ 86,089,108 $131,707,405 $130,271,971
When determining the fiscal impact, the Department of Education assumed the technical corrections in the current law relative to the consumer price index were made and the per pupil cost is $3,580.