HB 684-FN-LOCAL – AS INTRODUCED
2005 SESSION
04/09
HOUSE BILL 684-FN-LOCAL
AN ACT relative to education funding and the distribution of targeted aid and transition education grants.
SPONSORS: Rep. Gionet, Graf 3; Rep. Patten, Carr 4; Rep. Langley, Rock 18; Rep. Foose, Merr 1; Rep. Maybeck, Graf 8; Sen. Fuller Clark, Dist 24; Sen. Kenney, Dist 3; Sen. Gallus, Dist 1; Sen. Johnson, Dist 2
This bill:
I. Repeals the education property tax effective March 31, 2005.
II. Distributes targeted aid grants based on a formula which calculates a school district’s education operating need, fiscal capacity, and state average operating cost per weighted pupil, as adjusted by the consumer price index.
III. Provides transition education grants for fiscal years 2006-2010 to school districts based on a formula which compares the grant amount in the current fiscal year to the grant amount received in the preceding fiscal year.
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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
05-0702
04/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Five
AN ACT relative to education funding and the distribution of targeted aid and transition education grants.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Findings and Purpose.
I. 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 local education need and financial resources, and requires levy and collection of a statewide property tax that is divisive and unnecessary.
II. The purpose of this act is to cherish education and equalize educational opportunity by enabling every community to provide a constitutionally adequate education. In pursuit of such purpose, this act allocates state school aid through a distribution formula that compares each community’s available fiscal capacity to its education need, measured by the number of its pupils adjusted for the higher cost of educating certain pupils, and the state average operating cost per pupil, and provides aid to communities which cannot meet such need from local resources.
III. The state average operating cost per pupil, as determined in this act, is found to be an appropriate proxy for the per pupil cost of a constitutionally adequate education.
2 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” means an educationally disabled child as defined in RSA 186-C:2, I.
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.
3 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:
4 New Sections; Targeted Aid Grants; Transition Education Grants. Amend RSA 198 by inserting after section 41 the following new sections:
198:41-a Determination of Targeted Aid Grants.
I. For the biennium beginning July 1, 2005, and every biennium thereafter, except for municipalities where all school districts therein provide education to all of their pupils by paying tuition to other institutions, the department shall determine the amount of the targeted aid grant for a municipality as follows:
(a) A municipality’s targeted aid grant shall be its education operating need less its fiscal capacity, as determined in accordance with this paragraph.
(b) For the purpose of determining education operating need:
(1) “State average operating cost per pupil” means the amount calculated as such by the department. For the biennium beginning July 1, 2005, the amount shall be $7,809, based on the department’s calculation for the 2002-03 fiscal years.
(2) “State average operating cost per weighted pupil” means the amount produced by multiplying state average operating cost per pupil by the statewide total average daily membership in residence and dividing the product by the statewide total number of weighted pupils, as defined in this section. For the biennium beginning July 1, 2005, the amount shall be $5,816.
(3) A municipality’s total weighted pupils means the number of its elementary school pupils, including kindergarten pupils, plus 1.1 times the number of its high school pupils, plus the number of its educationally disabled children, plus the number of its pupils eligible to receive free or reduced price lunch, plus the number of its pupils with limited proficiency in the English language. In calculating and reporting its total weighted pupils, a municipality shall base the number on its average daily membership in residence, but shall not count any individual student in more than one of the categories of educationally disabled, free or reduced lunch, or limited English proficiency.
(4) A municipality’s education operating need shall be the state average operating cost per weighted pupil multiplied by the municipality’s total weighted pupils.
(c) For the purpose of determining a municipality’s fiscal capacity:
(1) “Total household income” means the municipality’s median household income multiplied by the number of its households, as determined by the 2000 United States census;
(2) “Equalized property valuation” means the amount determined as such by the department of revenue administration as of April 1, 2003, excluding property subject to taxation under RSA 83-F.
(3) A municipality’s fiscal capacity shall be the sum of its equalized property valuation plus 4.5 times the municipality’s total household income, divided by 2. The result shall then be multiplied by 0.0089.
(d) For the biennium beginning July 1, 2005, the calculation required under this paragraph shall be performed and distributed to school districts as soon as practicable, but no later than August 1, 2005. For subsequent bienniums, the calculation shall be performed and distributed not later than October 1 in the calendar year preceding the beginning of the biennium for which it is made.
II.(a) For the biennium beginning July 1, 2007, and for every biennium thereafter, the department shall perform the calculations required under this section based on the most recent available data representing the number of elementary and high school pupils, educationally disabled children, pupils eligible for free or reduced price lunch, pupils with limited proficiency in the English language in each municipality, and the equalized property valuation, excluding property subject to taxation under RSA 83-F.
(b) For the biennium beginning July 1, 2007, and every biennium thereafter, the amount of the state average operating cost per weighted pupil in the calculation of education operating need shall be increased according to the change in the northeast consumer price index, as calculated by the United States Department of Labor. Furthermore, the department shall recalculate a municipality’s population, median household income, and number of households by reference to the most recently available data from the United States decennial census or such current official estimates of such data from the department of revenue administration as may be available prior to the next United States decennial census. In addition, the department shall adjust the factor of 0.0089 in the calculation of fiscal capacity so that the total amount of grants provided under this section increases by the percentage increase in the northeast consumer price index plus the percentage increase in total state public elementary and secondary pupils since the calculation for the last preceding biennium.
III. For municipalities where all school districts therein provide education to all of their pupils by paying tuition to other institutions, the amount of the targeted aid grant for each municipality shall be the lesser of the following:
(a) The amount calculated in accordance with paragraph I or paragraph II of this section, as applicable; or
(b) The total amount paid for education expense as determined by the department.
198:41-b Transition Education Grants.
I. Notwithstanding the provisions of RSA 198:41-a, for the fiscal years 2006 through 2010, each municipality shall receive a transition education grant determined as follows:
(a) For fiscal year 2006, if a municipality’s targeted aid grant calculated under RSA 198:41-a is greater than the adequate education grant it received for fiscal year 2005, the municipality shall be entitled to receive an amount equal to the amount of its adequate education grant plus 10 percent of the difference, if any, between the amount of the municipality’s targeted aid grant for fiscal year 2006 and its adequate education grant for fiscal year 2005. However, if a municipality’s fiscal year 2006 targeted aid grant is less than its fiscal year 2005 adequate education grant, the municipality shall be entitled to receive 95 percent of such adequate education grant.
(b) For fiscal year 2007, if a municipality’s targeted aid grant calculated under RSA 198:41-a is greater than the adequate education grant it received for fiscal year 2005, the municipality shall be entitled to receive an amount equal to such adequate education grant, plus 20 percent of the difference, if any, between the amount of the fiscal year 2007 targeted aid grant and the fiscal year 2005 adequate education grant. However, if the municipality’s fiscal year 2007 targeted aid grant is less than the fiscal year 2005 adequate education grant, the municipality shall be entitled to receive 91 percent of such adequate education grant.
(c) For fiscal year 2008, a municipality shall be entitled to receive a transition education grant in an amount equal to the amount it was entitled to receive for fiscal year 2007 under this paragraph, plus 25 percent of the difference, if any, between the amount of the targeted aid grant it would be entitled to receive in fiscal year 2008 under RSA 198:41-a and the amount of the transition education grant it was entitled to receive in fiscal year 2007.
(d) For fiscal year 2009, a municipality shall be entitled to receive a transition education grant in an amount equal to the amount it was entitled to receive for fiscal year 2008 under this paragraph, plus 40 percent of the difference, if any, between the amount of the targeted aid grant it would be entitled to receive in fiscal year 2009 under RSA 198:41-a and the amount of the transition education grant it was entitled to receive in fiscal year 2008.
(e) For fiscal year 2010, a municipality shall be entitled to receive a transition education grant in an amount equal to the amount it was entitled to receive for fiscal year 2009 under this paragraph, plus 50 percent of the difference, if any, between the amount of the targeted aid grant it would be entitled to receive in fiscal year 2010 under RSA 198:41-a and the amount of the transition education grant it was entitled to receive in fiscal year 2009.
II. Beginning with fiscal year 2011, and every fiscal year thereafter, a municipality shall be entitled to receive an amount determined in accordance with RSA 198:41-a.
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 transition education grant determined in RSA 198:41-b, and beginning in fiscal year 2011, the targeted aid grant determined in RSA 198:41-a, 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, 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 198:41-a or RSA 198:41-b 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 198:41-a and RSA 198:41-b 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 amount shall be drawn from any funds in the treasury not otherwise appropriated and 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 198:41-a and RSA 198:41-b, 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. Transition education grants and targeted aid grants shall not be considered unanticipated funds under RSA 198:20-b.
7 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] of the grant received by the district under RSA 198:41-a or RSA 198:41-b, as applicable, divided by the district’s average daily membership in residence. 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.
8 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 grant calculated in accordance with RSA 198:40 through RSA 198:42] include such pupils in its calculation and report of weighted pupils under RSA 198:41-a, I(b)(3).
9 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] its pupils shall be included in the district’s calculation and report of weighted pupils under RSA 198:41-a, I(b)(3).
10 School Attendance; Duty of Parent; Compulsory Attendance. 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] targeted education grants under RSA [198:41] 198:41-a.
11 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.
12 Apportionment, Assessment, and Abatement of Taxes; Commissioner’s Warrant. Amend RSA 76:8, II to read as follows:
II. 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 for the use of the school district or districts [and, if there is an excess statewide enhanced education tax payment due pursuant to RSA 198:46, directing them to assess the amount of the excess payment and pay it to the department of revenue administration for deposit in the education trust fund]. Such sums shall be assessed at such times as may be prescribed for other taxes assessed by such selectmen or assessors of the municipality.
13 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. 2004, 195:3; and 2004, 200:27, relative to the education property tax.
IV. 2004, 200:16-200:23, relative to contingent applicability.
V. RSA 83-F:9, relative to exemption from the education property tax.
VI. RSA 198:39, I(g), relative to deposit of excess property tax payments.
VII. RSA 198:40-41, relative to determination of per pupil adequate education cost and adequate education grant.
VIII. RSA 198:44, relative to duties of the department of education and the board of education.
IX. RSA 198:46-47, relative to excess education property tax payment and forms.
X. RSA 198:49, relative to the adequate education and education financing commission.
XI. RSA 198:56-61, relative to low and moderate income homeowners property tax relief.
14 Effective Date.
I. Paragraph II of section 13 of this act shall take effect March 31, 2005.
II. The remainder of this act shall take effect July 1, 2005 at 12:02 a.m.
LBAO
05-0702
Revised 2/8/05
HB 684 FISCAL NOTE
AN ACT relative to education funding and the distribution of targeted aid and transition education grants.
FISCAL IMPACT:
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 $401,719,371 in FY 2006, $405,419,795 in FY 2007, $434,087,691 in FY 2008 and $414,000,593 in FY 2009. There will be no fiscal impact on county revenue or county and local expenditures.
METHODOLOGY:
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 $371,302,034, 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
Current
Statewide Property Tax $371,302,034 $371,302,034 $371,302,034 $371,302,034
Net Grants 488,679,117 497,172,300 548,376,191 555,332,286
Total Cost of Adequacy $859,981,151 $868,474,334 $919,678,225 $926,634,320
Proposed
Statewide Property Tax $ - $ - $ - $ -
Net Grants 458,261,780 463,054,539 485,590,534 512,633,727
Total Cost of Adequacy $458,261,780 $463,054,539 $485,590,534 $512,633,727
Change in Adequacy $401,719,371 $405,419,795 $434,087,691 $414,000,593
Change in Statewide Property
Tax ` (371,302,034) (371,302,034) (371,302,034) (371,302,034)
Net Change $ 30,417,337 $ 34,117,761 $ 62,785,657 $ 42,698,559
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.