Revision: Feb. 28, 2019, 12:12 p.m.
HB 709-FN-A-LOCAL - AS AMENDED BY THE HOUSE
27Feb2019... 0526h
27Feb2019... 0693h
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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AMENDED ANALYSIS
This bill:
I. Establishes fiscal capacity disparity aid to municipalities based on equalized valuation per pupil.
II. Provides additional aid to municipalities based on the percentage of pupils eligible to receive a free or reduced-price meal.
III. Requires school districts to report on the use of adequate education grant funds.
IV. Provides stabilization grants to municipalities in fiscal year 2020 and repeals the grants in fiscal year 2021 and thereafter.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
27Feb2019... 0526h
27Feb2019... 0693h 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 Cost of an Opportunity for an Adequate Education. Amend RSA 198:40-a, III to read as follows:
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.
IV. A school district which receives adequate education aid under this section for schools within its jurisdiction shall separately account for such aid as part of its financial accounting procedures. Such aid may also 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.
V. A school district which receives adequate education aid under this section 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.
VI. A school district which receives adequate education aid for schools within its jurisdiction pursuant to this section 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.
2 School Money; Additional Aid Based on Free or Reduced-Price Meals; Fiscal Capacity Disparity Aid. RSA 198:40-b and 40-c are repealed and reenacted to read as follows:
198:40-b Additional Aid Based on Free or Reduced-Price Meals. The commissioner shall distribute the following additional aid to a municipality's school district:
I. An additional $927 for each pupil in the ADMA who is eligible for a free or reduced-price meal 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
II. An additional $1,854 for each pupil in the ADMA who is eligible for a free or reduced-price meal, 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
III. An additional $2,781 for each pupil in the ADMA who is eligible for a free or reduced-price meal, 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
IV. An additional $3,708 for each pupil in the ADMA who is eligible for a free or reduced-price meal, in a school district in which 48 percent or more of the ADMA is eligible to receive a free or reduced-price meal.
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 as follows:
(a) A municipality with an equalized valuation per pupil of $350,000 or less shall receive $6,000 per pupil in the municipality's ADMA.
(b) A municipality with an equalized valuation per pupil between $350,001 and $999,999 shall receive a grant equal to .0092 cents for each dollar of difference between its equalized valuation per pupil and $1,000,000, per pupil in the municipality's ADMA.
(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.
3 School Money; Consumer Price Index Adjustment. Amend RSA 198:40-d to read as follows:
198:40-d Consumer Price Index Adjustment.
I. Beginning July 1, 2017 and every biennium thereafter, the department of education shall adjust the cost of an adequate education under RSA 198:40-a based on the average change in the Consumer Price Index for All Urban Consumers, Northeast Region, using the "services less medical care services" special aggregate index, as published by the Bureau of Labor Statistics, United States Department of Labor. The average change shall be calculated using the 3 calendar years ending 18 months before the beginning of the biennium for which the calculation is to be performed.
II. Beginning July 1, 2021 and every biennium thereafter, the department of education shall adjust the additional aid based on free or reduced-price meals as provided in RSA 198:40-b based on the average change in the Consumer Price Index for All Urban Consumers, Northeast Region, using the "services less medical care services" special aggregate index, as published by the Bureau of Labor Statistics, United States Department of Labor. The average change shall be calculated using the 3 calendar years ending 18 months before the beginning of the biennium for which the calculation is to be performed.
4 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 additional aid for free or reduced-price meals pursuant to RSA 198:40-b and fiscal capacity disparity aid pursuant to RSA 198:40-c.
5 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. This subparagraph shall not apply to a municipality in which the education tax revenue collected pursuant to RSA 76 exceeds the municipality's total cost of an adequate education.
(b) For the fiscal year ending June 30, 2021, the department of education shall adjust a municipality’s total education grant to an amount not to exceed 120 percent of the total education grant it received in the preceding fiscal year or an amount equal to its calculated cost of an opportunity for an adequate education under RSA 198:40-a less the amount of its education tax, whichever is greater.
(c) For the fiscal year ending June 30, 2022, and every fiscal year thereafter, the department of education shall adjust a municipality’s total education grant to an amount not to exceed 102 percent of the total education grant it received in the preceding fiscal year or an amount equal to its calculated cost of an opportunity for an adequate education under RSA 198:40-a less the amount of its education tax, whichever is greater.
6 Determination of Education Grants. Amend RSA 198:41, IV(d) to read as follows:
(d) For fiscal year 2017 [and each fiscal year thereafter] through fiscal year 2019, the department of education shall distribute a total education grant to each municipality in an amount equal to the total education grant for the fiscal year in which the grant is calculated plus a percentage of the municipality's fiscal year 2012 stabilization grant, if any, distributed to the municipality; the percentage shall be 96 percent for fiscal year 2017, and shall be reduced by 4 percent of the amount of the 2012 education grant for each fiscal year [thereafter] through fiscal year 2019.
(e) For fiscal year 2020 and each fiscal year thereafter, the department of education shall distribute a total education grant to each municipality in an amount equal to the total education grant to that municipality for the fiscal year in which the grant is calculated plus the amount of the fiscal year 2016 stabilization grant, if any, distributed to the municipality. No stabilization grant shall be distributed to any municipality for any fiscal year in which the municipality's education property tax revenue collected pursuant to RSA 76 exceeds the total cost of an adequate education or to any municipality for any fiscal year in which the municipality's ADMA is zero.
7 Repeal. RSA 198:41, IV, relative to stabilization grants, is repealed.
I. Section 6 of this act shall take effect July 1, 2019.
II. The remainder of this act shall take effect July 1, 2020.
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 | |||
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LOCAL: |
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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 |
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Differentiated Aid |
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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 |
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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:
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