Revision: Dec. 10, 2025, 9:37 a.m.
HB 1563-FN-LOCAL - AS INTRODUCED
2026 SESSION
26-2408
07/08
HOUSE BILL 1563-FN-LOCAL
AN ACT relative to the special education aid formula.
SPONSORS: Rep. Ladd, Graf. 5; Rep. Erf, Hills. 28; Rep. Peeples, Hills. 14; Rep. D. McGuire, Merr. 14; Rep. Popovici-Muller, Rock. 17; Rep. S. Smith, Sull. 3; Sen. Sullivan, Dist 18; Sen. Murphy, Dist 16; Sen. Innis, Dist 7
COMMITTEE: Education Funding
-----------------------------------------------------------------
ANALYSIS
This bill:
I. Requires the department of education to distribute aid to school districts for pupils whose special education costs exceed a certain dollar value, but only up to a certain threshold.
II. Creates considerations for calculating costs associated with a special education student's education.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
26-2408
07/08
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty-Six
AN ACT relative to the special education aid formula.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Education; Special Education; State Aid. Amend RSA 186-C:18, III to read as follows:
III.(a) The department of education shall distribute aid available under this paragraph as entitlement to such school districts as have a special education pupil for whose costs they are responsible, for whom the costs of special education in the fiscal year [exceed 3 and 1/2 times the most current state average expenditure per pupil for the school year preceding the year of distribution] exceed $60,000. If in any year, the amount appropriated for distribution as special education aid in accordance with this section is insufficient therefor, the appropriation shall be prorated proportionally based on entitlement among the districts entitled to a grant, provided that the department of education shall distribute to the school district not less than 80 percent of the district's entitlement in the fiscal year. The state may designate up to $250,000 of the funds which are appropriated as required by this paragraph, for each fiscal year, to assist those school districts which, under guidelines established by rules of the state board of education, may qualify for emergency assistance to mitigate the impact of special education costs. The state may designate up to an additional $250,000 of the funds which are appropriated under this paragraph for each fiscal year for any community of 1,000 or fewer residents to mitigate the impact of special education costs when emergency assistance is necessary to prevent significant financial harm to such district or community. Upon application to the commissioner of education, and approval by the commissioner, such funds may be accepted and expended by school districts in accordance with this chapter; provided, however, that if a school district has received emergency assistance funds for certain children with disabilities, it shall not receive special education aid for those same children with disabilities. If any of the funds designated for emergency assistance under this paragraph are not used for such emergency assistance purposes, the funds shall be used to assist school districts in meeting special education cost increases in their special education programs as provided by this paragraph.
(b) The school district shall be liable for [3 and 1/2 times the estimated state average expenditure per pupil for the school year preceding the year of distribution] $60,000, plus 20 percent of the additional cost, up to [10 times the estimated state average expenditure] $200,000 per pupil, [for the school year preceding the year of distribution.] and 10 percent of the cost above $200,000 per pupil.
(c) The department of education shall be liable for 80 percent of the cost above [the 3 1/2 times the estimated state average expenditure] $60,000 per pupil [for the school year preceding the year of distribution, up to 10 times the estimated state average expenditure per pupil for the school year preceding the year of distribution. The department of education shall be liable for all costs in excess of 10 times the estimated state average expenditure per pupil for the school year preceding the year of distribution.], up to $200,000, and 90 percent of the cost above $200,000; however, no special education aid shall be eligible for reimbursement by the department of education for more than a total of $160,000 per pupil.
2 New Paragraph; Education; Special Education; State Aid. Amend RSA 186-C:18 by inserting after paragraph XI the following new paragraph:
XII. A district shall be deemed eligible to apply for reimbursement for special education aid when the costs associated with an individual student, after offsets from other available revenue sources, exceed $60,000 of the expenditure per pupil pursuant to paragraph III(a).
(a) In calculating costs associated with an individual student, the costs shall be incurred solely as a result of the provision of special education and related services to the student’s individual education program pursuant to RSA 186-C:7.
(b) Ineligible costs shall include the basic cost of the classroom, including the maintenance and operation of the classroom, basic materials and supplies, transportation not required by the student’s individual education program, and other routine or normal costs associated with the provision of special education and related services to children with disabilities.
(c) Eligible expenses for reimbursement under the special education aid program shall primarily include costs for services and resources to provide a free appropriate public education (FAPE) for students with disabilities, including those with special education instruction, therapies, adaptive equipment, assistive technology, and transportation specifically for students requiring special assistance.? Such costs shall be necessary, reasonable, and directly benefit the student's education and disability needs as outlined in their individualized education program. The state shall provide funding to school districts to help offset such expenses, but districts shall also be responsible for a portion of the costs.
(d) The district shall demonstrate and document that it has fully accessed, to the maximum extent possible, other available revenue sources, including Medicaid, or provide documentation as to why other revenue sources were unavailable to the district for special education aid.
(e) Other available revenue sources, including Medicaid, shall be applied by the district as offsets to reimbursable costs for each special education cost reimbursed through special education aid.
3 Effective Date. This act shall take effect July 1, 2028.
26-2408
12/4/25
HB 1563-FN-LOCAL- FISCAL NOTE
AS INTRODUCED
AN ACT relative to the special education aid formula.
FISCAL IMPACT: This bill does not provide funding, nor does it authorize new positions
|
| |||||
Estimated State Impact | ||||||
| FY 2026 | FY 2027 | FY 2028 | FY 2029 | ||
Revenue | $0 | $0 | $0 | $0 | ||
Revenue Fund(s) | None | |||||
Expenditures* | $0 | $0 | Department Positions $204K in FY 2028 and $214K in FY 2029
Special Education Aid Impact Indeterminable in FY 2029 and Beyond | |||
Funding Source(s) | Education Trust Fund | |||||
Appropriations* | $0 | $0 | $0 | $0 | ||
Funding Source(s) | None | |||||
*Expenditure = Cost of bill *Appropriation = Authorized funding to cover cost of bill | ||||||
| ||||||
Estimated Political Subdivision Impact | ||||||
| FY 2026 | FY 2027 | FY 2028 | FY 2029 | ||
Local Revenue | $0 | $0 | $0 | Indeterminable | ||
Local Expenditures | $0 | $0 | $0 | Indeterminable | ||
METHODOLOGY:
This bill, effective in FY 2029, makes the following changes:
The proposed changes aim to place greater fiscal responsibility at the district level. Ultimately, this bill’s impact on state reimbursements to districts is indeterminable, as it will be based on activity from the 2027-2028 school year, which cannot be predicted. For illustrative purposes, the Department of Education has provided the following:
Under the proposed formula, when compared to the current reimbursement method, districts would realize a savings of $12,255.74 per student whose annual special education costs fall within the range of $75,319.68 to $215,199.09—regardless of the specific cost incurred within that range. Beyond this range, the financial benefit begins to decline, and once a student’s annual service costs exceed $263,295.56, the new formula results in a net increase in cost to the district for each student. Based on initial FY24–25 special education aid submissions, 54 students had service costs exceeding $263,295.56, while 840 students fell below that threshold. The following breakdown illustrates the impact of the proposed changes on state and district costs:
54 Students Above | Current Formula | Proposed Formula |
|
|
Cost to Districts | $5,577,960.35 | $11,720,717.86 | Increase | $6,142,757.51 |
Cost to State | $14,782,757.51 | $8,640,000.00 | Savings | ($6,142,757.51) |
|
|
|
|
|
$263,295.59 Threshold | ||||
|
|
|
|
|
840 Students Below | Current Formula | Proposed Formula |
|
|
Cost to Districts | $73,005,048.12 | $62,872,492.91 | Increase | ($10,132,555.21) |
Cost to State | $39,722,775.37 | $49,855,330.58 | Savings | $10,132,555.21 |
The Department would also note that if the cap payment to districts is $160,000 this would be enacted as soon as a district reaches around $260,000, making the second calculation of 10% paid by the district and 90% paid by the state only applicable to around $60,000 or $54,000 additional funds from the state. This would mean that a district that spent $260,000 and a district that spent $591,000 (highest submission this year) would receive the same amount of reimbursement.
The Department of Education (NHED) has also provided the following challenges created by this bill:
Administration
These changes also introduce new complexities into an already lengthy and administratively burdensome process. One such variable is the number of students whose service costs currently exceed the proposed $60,000 threshold but are under the current threshold of $75,319.68. Currently, the Department does not collect comprehensive data on students whose special education costs fall below the existing reimbursement threshold, as invoices are only submitted for those exceeding it. However, based on observable trends, two key developments can reasonably be inferred: (1) the overall number of students receiving special education services is increasing, and (2) the number of students submitted for special education aid is also on the rise. To estimate the potential administrative impact of the proposed $60,000 reimbursement threshold, several key data points can be utilized: the total number of students receiving special education services, the statewide special education expenditure reported on the state DOE-25 (FY24–25 estimated), the number of students submitted for special education aid, and the total district-level costs associated with those submissions. By applying a proportional adjustment across these variables, a reasonable estimate of the number of additional students who may become eligible for review under the new threshold can be estimated.
Assuming an even distribution of costs among the more than 30,000 remaining students receiving special education services, the table below provides a snapshot of the potential increase in aid submissions and ultimately, administrative workload. If each newly eligible student generates just two invoices per month over a standard 10-month school year, this would result in at least 20 additional invoices per student requiring data entry and review. This is in addition to the necessary service logs, transportation documentation, and other supporting materials required for aid verification.
School Year | DOE 25 Total | NH Special Ed Kid Total | District Special Ed Aid Cost Total | District Submitted Kid Total |
21-22 | 842,738,008 | 30,309 | 82,085,908 | 760 |
22-23 | 915,220,911 | 30,917 | 89,546,192 | 762 |
23-24 | 978,485,932 | 32,019 | 97,798,489 | 857 |
24-25 | 1,047,896,208 | 32,324 | 119,129,962 | 907 |
School_Year | Estimated_Students | CI_Lower | CI_Upper |
21-22 | 515 | 479 | 551 |
22-23 | 507 | 471 | 542 |
23-24 | 564 | 526 | 601 |
24-25 | 584 | 547 | 622 |
In reviewing the language regarding Medicaid payments this would add additional tasks to the Bureau of Special Education Support. This work would require at least two additional FTE staff to complete this work. The Department states the estimated cost of two positions (SOC 13-05, step 4, start date 07/01/27) would be $204,000 in FY 2028 and $214,000 in FY 2029.
The Medicaid portion is under the oversight of DHHS and therefore NHED would not be able to determine the amount eligible under Medicaid in order to subtract the amount reimbursable to the district.
NHED also notes that with this additional work added to the review process it is unclear if the Bureau will be able to complete the review of costs in the July 31 to December 1 time frame and this may need to be adjusted.
NHED believes this would also require a change to the current system that tracks Special Education Aid submissions as this is done through NHSEIS and the system would have to take into account the additional revenue sources the district accessed. The cost for this is unknown however typical changes of this type are at a minimum $250,000. As the data needed is not generated at the NHED and would need to come from another agency, this amount could be higher.
As to ensuring that only allowed costs are paid for through Special Education Aid, the language expands on what is allowed and what is not. Currently the Department does not allow costs outlined in XXII (b). In XXII (c) the language places parameters around the IEP team decision based on the child’s need. Decisions cannot be based on financial impacts but rather the specific needs of the child. This language contradicts the language in the Federal IDEA language regarding the determination of services for students with IEPs and limits a district’s ability to provide the services needed to a student with a disability.
AGENCIES CONTACTED:
Department of Education