Bill Text - HB709 (2019)

Revision: Feb. 5, 2019, 9:35 a.m.

HB 709-FN-A-LOCAL - AS INTRODUCED

 

 

2019 SESSION

19-0254

04/06

 

HOUSE BILL 709-FN-A-LOCAL

 

AN ACT relative to the formula for determining funding for an adequate education.

 

SPONSORS: Rep. Ladd, Graf. 4; Rep. Steven Smith, Sull. 11; Rep. Shaw, Hills. 16; Rep. Leishman, Hills. 24; Rep. Hennessey, Graf. 1; Rep. Horn, Merr. 2; Rep. Flanagan, Hills. 26; Rep. Ruprecht, Graf. 15; Rep. Cordelli, Carr. 4; Sen. Reagan, Dist 17; Sen. Watters, Dist 4; Sen. Gray, Dist 6

 

COMMITTEE: Education

 

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ANALYSIS

 

This bill increases the base per pupil cost for an adequate education; increases differentiated aid available to eligible pupils; establishes fiscal capacity disparity aid to municipalities based on equalized valuation per pupil; requires school districts to report on the use of adequate education grant funds; amends the law governing transportation of pupils in kindergarten through grade 12; and repeals stabilization grants to municipalities.

 

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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

19-0254

04/06

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Nineteen

 

AN ACT relative to the formula for determining funding for an adequate education.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

1  Application of Receipts; Excess Education Tax.  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 198:42-a, RSA 284:44 and RSA 284:47, and from the sweepstakes fund, which shall be credited to the education trust fund under RSA 198:39.

2  Assessment; 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 education tax payment due pursuant to RSA 198:42-a, 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.  

3  Transportation of Pupils.  Amend RSA 189:6 to read as follows:

189:6  Transportation of Pupils.  The local school district shall furnish transportation to [all] pupils in [grade 1] kindergarten through grade 8 who live more than 2 miles from the school to which they are assigned.  [The local school board may furnish transportation to kindergarten pupils, pupils in grades above the eighth or to any pupils residing less than 2 miles from the school to which they are assigned,] The local school district may furnish transportation to pupils in kindergarten through grade 8 who live 2 miles or less from the school to which they are assigned, and to pupils in grades 9 through 12, when it finds that this is appropriate, and shall furnish it when so directed by the commissioner of education.

4  Education Trust Fund Created and Invested  RSA 198:39, I(g) is repealed and reenacted to read as follows:

(g)  The full amount of excess education property tax payments from the department of revenue administration pursuant to RSA 198:42-a.

5  Cost of an Opportunity for an Adequate Education.  Amend RSA 198:40-a to read as follows:

198:40-a  Cost of an Opportunity for an Adequate Education.

I.  For the biennium beginning July 1, [2015] 2021, the annual cost of providing the opportunity for an adequate education as defined in RSA 193-E:2-a shall be as specified in paragraph II.  The department shall adjust the rates specified in this paragraph in accordance with RSA 198:40-d.

II.(a)  [A cost of $3,561.27] $3,709 per pupil in the ADMA, plus differentiated aid as follows:

(b)  An additional [$1,780.63] $1,854 for each pupil in the ADMA who is eligible for a free or reduced price meal, plus an additional amount as follows:

(1)  An additional $927 multiplied by the ADMA, in a school district in which at least 12 percent but less than 24 percent of the ADMA is eligible to receive a free or reduced-price meal; or

(2)  An additional $1,854 multiplied by the ADMA, in a school district in which at least 24 percent but less than 36 percent of the ADMA is eligible to receive a free or reduced-price meal; or

(3)  An additional $2,781 multiplied by the ADMA, in a school district in which at least 36 percent but less than 48 percent of the ADMA is eligible to receive a free or reduced-price meal; or

(4)  An additional $3,709 multiplied by the ADMA, in a school district in which 48 percent or more of the ADMA is eligible to receive a free or reduced-price meal; plus

(c)  An additional [$697.77] $726 for each pupil in the ADMA who is an English language learner receiving English language instruction; plus

(d)  An additional [$1,915.86] $1,995 for each pupil in the ADMA who is receiving special education services; plus

(e)  An additional [$697.77] $726 for each third grade pupil in the ADMA with a score below the proficient level on the reading component of the state assessment administered pursuant to RSA 193-C:6 or the authorized, locally-administered assessment as provided in RSA 193-C:3, IV(i), provided the pupil is not eligible to receive differentiated aid pursuant to subparagraphs (b)-(d).  A school district receiving aid under this subparagraph shall annually provide to the department of education documentation demonstrating that the district has implemented an instructional program to improve non-proficient pupil reading.

III.  The sum total calculated under paragraph II shall be the cost of an opportunity for an adequate education.  The department shall determine the cost of an opportunity for an adequate education for each municipality based on the ADMA of pupils who reside in that municipality.

6  School Money; Accountability for Use of Adequate Education Aid; Fiscal Capacity Disparity Aid.  RSA 198:40-b and 40-c are repealed and reenacted to read as follows:

198:40-b  Accountability for Use of Adequate Education Aid.

I.  A school district which receives adequate education aid under RSA 198:40-a for schools within its jurisdiction shall separately account for such aid as part of its financial accounting procedures.  Such aid shall only be used to provide enhanced programs in schools within its jurisdiction for which such aid has been allocated that are known to improve pupil achievement, including but not limited to: pre-kindergarten programs, full-day kindergarten programs, extended learning time, professional development opportunities for teachers, hiring of additional instructional and non-instructional personnel, programs designed to reduce class size, parental involvement programs, additional technology resources, dropout prevention programs, principal incentive programs, and curriculum enrichment programs.  The school district shall determine which programs are most needed and most appropriate for their pupils.  The department shall annually review and update the list of approved programs from which a school district may choose.

II.  A school district which receives adequate education aid under RSA 198:40-a for use in schools within its jurisdiction shall annually submit a report to the commissioner documenting for each school within its jurisdiction for which such aid has been allocated, the enhanced programs selected for implementation, an explanation of the specific educational needs which the program is intended to address, an explanation of how the program will be implemented in the school, and an estimate of the cost of implementing the program.  The commissioner shall review these reports to ensure that adequate education aid will be used to provide programs approved under paragraph I.

III.  A school district which receives adequate education aid for schools within its jurisdiction pursuant to RSA 198:40-a shall direct such aid to the schools for which such aid was calculated.  A school district which receives adequate education aid for pupils that attend schools in another school district, shall direct such aid to the school district where its pupils are being educated.  Any adequate education aid directed from one school district to another pursuant to this paragraph shall be a credit against any existing financial liability between the school districts.

198:40-c  Fiscal Capacity Disparity Aid.   

I.  In addition to aid for the cost of the opportunity for an adequate education provided under RSA 198:40-a, each biennium the commissioner shall calculate fiscal capacity disparity aid and provide that amount of aid in each year of the biennium to a municipality’s school districts and to chartered public schools approved under RSA 194-B as follows:  

(a)  A municipality with an equalized valuation per pupil of $660,000 or less shall receive $1,500 per pupil in the municipality's ADMA.

(b)  A municipality with an equalized valuation per pupil between $660,001 and $999,999 shall receive .0044 cents per pupil in the municipality's ADMA per dollar of equalized valuation per pupil between $660,001 and $999,999.

(c)  A municipality with an equalized valuation per pupil of $1,000,000 or more shall receive no fiscal capacity disparity aid.

II.  Fiscal capacity disparity aid shall be distributed pursuant to RSA 198:42.

III.  In this section, "equalized valuation per pupil” means a municipality’s equalized valuation, including properties subject to taxation under RSA 82 and RSA 83-F, as determined by the department of revenue administration, that was the basis for the local tax assessment in the determination year, divided by the school district’s kindergarten through grade 12 ADMA in the determination year.  

7  Determination of Adequate Education Grants.  Amend RSA 198:41, I to read as follows:

I.  Except for municipalities where all school districts therein provide education to all of their pupils by paying tuition to other institutions, the department of education shall determine the total education grant for the municipality as follows:

(a)  Add the per pupil cost of providing the opportunity for an adequate education for which each pupil is eligible pursuant to RSA 198:40-a, I-III, and from such amount;

(b)  Subtract the amount of the education tax warrant to be issued by the commissioner of revenue administration for such municipality reported pursuant to RSA 76:8 for the next tax year; and

(c)  Add the municipality's fiscal capacity disparity aid pursuant to RSA 198:40-c.

8  Determination of Education Grants.  RSA 198:41, III is repealed and reenacted to read as follows:

III.(a)  No municipality shall receive a total education grant which is less than the total education grant received in the preceding fiscal year.

(b)  The additional amount of a municipality's free and reduced-price meal aid calculated pursuant to subparagraphs (1)-(4) only in RSA 198:40-a, II(b), shall not be more than 101.5 percent of the municipality's free and reduced-price meals aid received in the previous fiscal year.   

(c)  A municipality's fiscal capacity disparity aid pursuant to RSA 198:40-c shall not be more than 101.5 percent of the municipality's fiscal capacity disparity aid received in the previous fiscal year.

9  New Section; Excess Education Property Tax Payments.  Amend RSA 198 by inserting after section 42 the following new section:

198:42-a  Excess Education Property Tax Payments.

I.  The commissioner of the department of revenue administration shall annually calculate a municipality’s excess education tax pursuant to RSA 198:41 and shall notify each municipality of the amount of its excess.  A municipality shall remit any excess education tax revenue to the department of revenue administration on or before March 15 of the tax year in which the excess occurs.  The commissioner shall collect and remit the excess to the state treasurer for deposit in the education trust fund established by RSA 198:39.

II.  The amount of such excess to be remitted shall not include any income derived from the investment of funds by the municipal treasurers under RSA 41:29 and RSA 48:16.

III.  The commissioner shall approve and provide forms relative to the reporting and remitting of excess education tax by the municipalities.

10  Repeal.  RSA 198:41, IV, relative to stabilization grants, is repealed.

11  Effective Date.  This act shall take effect July 1, 2021.

 

LBAO

19-0254

Revised 2/5/19

 

HB 709-FN-A-LOCAL- FISCAL NOTE

AS INTRODUCED

 

AN ACT relative to the formula for determining funding for an adequate education.

 

FISCAL IMPACT:      [ X ] State              [    ] County               [ X ] Local              [    ] None

 

 

Estimated Increase / (Decrease)

STATE:

FY 2020

FY 2021

FY 2022

FY 2023

   Appropriation

$0

$0

$0

$0

   Revenue

$0

$0

$0

$0

   Expenditures

$0

$0

Indeterminable Increase

Indeterminable Increase

Funding Source:

  [    ] General            [ X ] Education            [    ] Highway           [    ] Other

 

 

 

 

 

LOCAL:

 

 

 

 

   Revenue

$0

$0

Indeterminable Increase

Indeterminable Increase

   Expenditures

$0

$0

Indeterminable

Indeterminable

 

METHODOLOGY:

This bill, effective July 1, 2021 (FY 2022), changes per pupil aid amounts in the adequate education grant calculation, establishes an additional free and reduced lunch differentiated aid (up to a capped amount), establishes a fiscal capacity disparity aid per pupil grant based on a municipality’s equalized valuation per pupil (up to a capped amount), eliminates stabilization grants, creates a hold-harmless provision that no municipality would receive a total education grant in an amount less than the previous year, requires municipalities to remit excess statewide education property tax payments to be retained in the education trust fund, and modifies the requirement for school districts to provide transportation.  Each change will be discussed below.

 

Changes to Education Grant Calculations

The proposed bill modifies the base amount for adequacy, as well as each differentiated aid component, as well as eliminates stabilization grants:

 

FY 2022 and Beyond

Current Law*

Proposed

Base Adequacy

$3,782.96

$3,709.00

 

 

 

Differentiated Aid

 

 

     Special Education

$2,035.11

$1,995.00

     English Language Learner

$740.14

$726.00

     3rd Grade Reading

$740.14

$726.00

     Free and Reduced Lunch (F&R)

$1,891.47

$1,854.00

     Additional for Each F&R Pupil, if Total   F&R ADMA is between 12.00% - 23.99% of Total ADMA**

$0

$927.00

     Additional for Each F&R Pupil, if Total   F&R ADMA is between 24.00% - 35.99% of Total ADMA**

$0

$1,854.00

     Additional for Each F&R Pupil, if Total   F&R ADMA is between 36.00% - 47.99% of Total ADMA**

$0

$2,781.00

     Additional for Each F&R Pupil, if Total   F&R ADMA is not less than 48.00% of Total ADMA**

$0

$3,709.00

 

 

 

Stabilization Grants

(Vary by Municipality)

Yes

No

* Based on an assumed 2% CPI adjustment from FY 2020-21 Rates

** See information relative to this bill’s cap on additional F&R aid amounts below.

 

Fiscal Capacity Disparity Aid

This bill also establishes a fiscal capacity disparity aid grant based upon a municipality’s equalized valuation per pupil (EVPP), which is assumed to become part of the total education grant calculation.  Municipalities with an EVPP of $660,000 or less would receive an additional $1,500 per pupil and municipalities with an EVPP of $1,000,000 or greater would receive no grant.  Municipalities that fall between $660,001 and $999,999 will receive a partial grant of an amount equal to $0.0044 per one dollar of EVPP it has less than $1,000,000, which generates a sliding grant amount based on its EVPP.  Below is an illustration of how this grant would be calculated:

 

 

A

B

C

D

E

EVPP

EVPP < $660K or

EVPP > $1M?

Difference $1M and EVPP

Factor

Per Pupil Grant Amount

(Default Amount or

Column C x Factor)

Municipality A

$560,000

YES

N/A

N/A

$1,500

Municipality B

$700,000

NO

$300,000

$0.0044

$1,320

Municipality C

$950,000

NO

$50,000

$0.0044

$220

Municipality D

$1,100,000

YES

N/A

N/A

$0

Note:  See information relative to this bill’s cap on fiscal capacity disparity aid grant amounts below.

 

 

Excess Statewide Education Property Tax (SWEPT) Payments

Under this bill, municipalities will be required to remit the amount of SWEPT it raises that exceeds its calculated cost of an adequate education to the state, to be retained in the education trust fund.  Under current law, municipalities raise and retain the SWEPT amount, even if it exceeds its calculated cost of adequacy.  In FY 2019, this amount totaled approximately $29,500,000 (statewide).  It is unclear how this provision would be impacted given the “hold harmless” provision also included in the bill (see below for more information).

 

Cap on Grant Amounts / “Hold Harmless” Provision

This bill includes both caps on certain components of the grant calculation, as well as a “hold harmless” provision:

  • Cap on Additional “Free and Reduced (F&R) Lunch” Differentiated Aid – This bill caps the total amount of additional F&R aid, resulting from the new additional rate amounts, at no more than 101.5% of the previous year’s total F&R aid received.  This would require an adjustment to the total calculated additional F&R aid, based on the municipality’s previous year’s total F&R aid.
  • Cap on Fiscal Capacity Disparity Aid – This bill caps the total amount of fiscal capacity disparity aid at no more than 101.5% of the previous year’s fiscal capacity disparity aid received.  It is unclear how this provision would be implemented, specifically in the first year (FY 2022), as the total fiscal capacity disparity aid in the previous year (FY 2021) is zero, since this is a new aid component.
  • “Hold- Harmless” Provision – This bill requires that in no year can a municipality receive a total education grant that is less than its total education grant from the previous year.  It is unclear how this provision would impact this bill’s

 

Impact on Charter Public School Grants

Since this bill modifies adequate education rates, it will increase grants to charter public schools  Furthermore, the newly established additional grant will also be available to charter public schools, however it is unclear how these grants will be determined as they are based on a municipality’s equalized valuation per pupil.  Due to not knowing which municipality (or municipalities) would be considered in determining these grants (municipality where school is located or municpalities where students reside) or what the enrollments would be in FY 2022 and beyond, the increase in payments to charter schools from the education trust fund under this bill cannot be determined.  

 

Transportation

This bill modifies transportation requirements for school districts.  It is not know how much of an impact, if any, this will have on local school district expenditures.

 

Total Estimated Impact

Due to the several reasons stated above, an estimate of this bill’s impact on state education trust fund expenditures and local school district revenue cannot be estimated at this time.

 

AGENCIES CONTACTED:

Department of Education