sb 0539

CHAPTER 173

SB 539-FN-LOCAL – FINAL VERSION

AN ACT relative to the cost of an adequate education and provision of fiscal capacity disparity aid.

SPONSORS: Sen. Estabrook, Dist 21; Sen. Foster, Dist 13; Sen. D'Allesandro, Dist 20; Rep. Rous, Straf 7; Rep. Foose, Merr 1; Rep. Reever, Belk 4

I. Determines the per pupil cost of the opportunity for an adequate education which includes differentiated aid distributed to schools based on the number of pupils receiving special education services, or eligible for a free or reduced-price lunch, or who are English language learners.

II. Requires schools receiving differentiated aid to use it to implement enhanced programs known to improve pupil achievement.

III. Establishes a joint legislative oversight committee on accountability for an adequate education.

IV. Provides fiscal capacity disparity aid, in addition to aid for the cost of the opportunity for an adequate education, based on a municipality’s equalized valuation, including utilities, per pupil and median family income.

VI. Provides aid to certain municipalities for the 2010 and 2011 fiscal years by ensuring that no school district receives a total education grant exceeding that district's total education grant for the 2009 fiscal year by more than 15 percent and that no school district's total education grant is less than its total education grant for the 2009 fiscal year during that time period.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

AN ACT relative to the cost of an adequate education and provision of fiscal capacity disparity aid.

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

I. The general court finds that the cost of the opportunity for an adequate education for public school students, as established in this act, is based upon the definition of the opportunity for an adequate education enacted in the 2007 Laws of New Hampshire, chapter 270. The methodologies for costing, determination of resources, and elements of cost included in this act are intended to and do fulfill the state’s duty under the Encouragement of Literature clause of the New Hampshire constitution to deliver the opportunity for an adequate education.

II. The individual components of the cost were selected on the basis of their effectiveness in delivering educational opportunity and after extensive review, debate and discussion by the joint legislative oversight committee on costing an adequate education and the general court. The legislative process consisted of obtaining information from professional educators, government officials, education policy and finance experts, and the public on the establishment of the cost of an adequate education.

III. The joint legislative oversight committee on costing issued detailed findings and recommendations on the composition of the cost of an adequate education and how the funds for an adequate education should be allocated and accounted for in order to ensure that the educational needs of all public school students are met. These findings and recommendations were submitted to the general court and are an integral basis of the costing determinations reflected in this act.

IV. The cost of the opportunity for an adequate education consists of several elements. All such elements must be provided in order to ensure the delivery of the state’s constitutional duty. The universal cost represents the per pupil resources necessary to provide an adequate education where no additional aid is necessary to cover the increased costs of providing that opportunity to students who have special education needs, who have limited English language proficiency or are in schools with significant concentrations of economically disadvantaged students. The universal cost represents the costs attributable only to the subset of education that is included in the definition in RSA 193-E:2-a.

V. The general court further finds that additional aid, referred to as differentiated aid, is also required to fulfill the state’s constitutional duty to provide the opportunity for an adequate education for certain students. This act allocates such differentiated aid to special education students, English language learners, and students in schools with significant concentrations of economically disadvantaged students, the latter category based upon eligibility for federally-provided free and reduced-price lunch programs and the concentration of such eligible students in a school.

VI. In determining the need for differentiated aid in addition to providing the universal cost for an adequate education, the general court recognizes that the resources needed to provide the opportunity for an adequate education are not the same for all students or at all schools.

VII. The general court recognizes that special education students face unique challenges that require educational support and instructional resources in addition to those provided by the universal cost. After reviewing the findings of the joint legislative oversight committee and conducting its own inquiry into forms of special education funding and the laws relevant to such funding mechanisms, the general court finds that each special education student should receive additional funding above the universal cost. This per pupil amount is not dependent upon a student's level of disability or learning environment because the general court wishes to encourage the placement of special education students in the least restrictive learning environment possible.

VIII. After reviewing the findings of the legislative oversight committee, including its survey of services provided to English language learners throughout the country and in New Hampshire, the general court finds that additional funding is required to provide English language learners with the opportunity for an adequate education. Accordingly, the general court finds that an amount should be distributed to each pupil receiving English language instruction in a district. This supplemental amount is based upon providing one teacher per 70 students receiving English language instruction and is in-line with funding provided throughout the United States to English language learners.

IX. The joint legislative oversight committee report recognized that economically disadvantaged students require supplemental funding in addition to the universal cost amount. During its deliberations, the committee heard testimony and thoroughly reviewed studies, research, and data about the challenges that school districts face when educating economically disadvantaged students and all pupils in schools with significant concentrations of economically disadvantaged pupils, as well as the costs and considerations involved in implementing programs designed to overcome those obstacles. As encouraged by the committee report, the general court reviewed the committee's conclusions and used the legislative process to craft a funding mechanism that would provide the opportunity for an adequate education to all pupils in schools with significant concentrations of economically disadvantaged pupils. The general court further finds it necessary to provide additional aid to economically disadvantaged pupils in schools without significant concentrations of economically disadvantaged pupils to provide them with the opportunity for an adequate education.

X. The general court recognizes that the adequacy and need-based formula implemented by this legislation will significantly alter the manner in which funds for public education are distributed to school districts. In recognition of the impact and scope of these changes, and in an effort to avoid financial dislocations, the general court finds that the formula should be phased into operation over the course of 2 years. In consultation with school funding experts, the general court determines that a transition period will allow school districts whose funding will be altered by this formula time to adjust their budgets and their allocation and use of resources. Accordingly, for the fiscal years 2010 and 2011, the general court determines that the new funding system enacted as part of this legislation should be phased in a manner that allows all school districts to attain adequate funding while protecting districts during the transition period against disruptive reductions in funding in those instances where the legislation's adequacy computations may ultimately reduce the amount of state education funds allocated to a district.

XI. The general court recognizes that certain communities lack the relative wealth and fiscal capacity to fund local education to the extent desired by those communities. For this reason, the general court finds it appropriate to provide money above the cost of the opportunity for an adequate education based upon the fiscal capacity and relative need of certain communities.

XII. This act is not intended to stand in isolation from the other statutes and rules relating to educating New Hampshire students as required by state and federal law.

173:2 Commissioner’s Warrant. RSA 76:8, II is repealed and reenacted 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 198:46, 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.

173:3 Adequate Education. Amend the subdivision heading preceding RSA 198:38 to read as follows:

[~~State Aid for Educational Equality~~] Adequate Education; Education Trust Fund

173:4 Adequate Education; Definitions. RSA 198:38 is repealed and reenacted to read as follows:

I. “Average daily membership in attendance” or “ADMA” means the aggregate half-day membership of pupils in kindergarten through grade 12 attending schools operated by a school district divided by the number of half-days of instruction offered. The average daily membership in attendance shall include any pupil who is a resident of New Hampshire educated at public expense, including any pupil whose school district provides his or her education through a private or out-of-district placement.

IV. “Determination year” means the fiscal year that was 3 years prior to the fiscal year for which aid is to be determined. Unless otherwise indicated, determination year data shall be used to calculate aid.

V. “Educationally disabled child” or “educationally disabled pupil” shall mean “educationally disabled child” as defined in RSA 186-C:2, I.

VI. “English language learner” means a child who has a predominant language other than English or who is educationally disadvantaged by a limited English proficiency, and who is receiving regularly scheduled English language instruction. For the purposes of RSA 198:40-a, the department shall calculate the number of English language learners using ADMA data. The department shall use the ADMA of all pupils receiving English language learner services as of October 2006 in calculating 2006-2007 ADMA data.

VII. “Pupils eligible for a free or reduced-price meal” means pupils in grade 1 through grade 12 who are eligible for the federal free or reduced-price meal program. For the purposes of RSA 198:40-a, the department shall calculate the concentration of pupils eligible for free or reduced-price meals using ADMA data. The department shall use the ADMA of pupils eligible for a free or reduced-price meal as of October 2006 in calculating ADMA concentrations for 2006-2007 ADMA data.

VIII. “School district” means school district as defined in RSA 194:1 and shall include cooperative school districts as defined in RSA 195:1, I.

173:5 Cost of an Opportunity for an Adequate Education. RSA 198:40-a is repealed and reenacted to read as follows:

I. Beginning July 1, 2009, and for every biennium thereafter, the annual cost of providing the opportunity for an adequate education as defined in RSA 193-E:2-a shall be $3,450 per pupil attending a public school, plus any applicable differentiated aid for which a pupil is eligible. Differentiated aid shall be calculated as follows:

(a) An additional $431 per pupil in kindergarten through grade 12 eligible for the federal free and reduced-price meal program who attends a public school in which less than 12 percent of the pupils reported in the school’s ADMA in the determination year are eligible for the federal free and reduced-price meal program.

(b) An additional $863 per pupil in a public school in which at least 12 percent but less than 24 percent of pupils reported in the school’s ADMA in the determination year, are eligible for the federal free or reduced-price meal program.

(c) An additional $1,725 per pupil in a public school in which at least 24 percent but less than 36 percent of pupils reported in the school’s ADMA in the determination year, are eligible for the federal free or reduced-price meal program.

(d) An additional $2,588 per pupil in a public school in which at least 36 percent but less than 48 percent of the pupils reported in the school’s ADMA in the determination year, are eligible for the federal free or reduced-price meal program.

(e) An additional $3,450 per pupil in a public school in which 48 percent or more of the pupils reported in the school’s ADMA in the determination year, are eligible for the federal free or reduced-price meal program.

II. In addition to the amount in paragraph I, an additional $675 for each pupil reported in the public school’s ADMA in the determination year who is an English language learner and who is receiving English language instruction.

III. In addition to the amounts in paragraphs I and II, an additional $1,856 for each pupil reported in the public school’s ADMA in the determination year who is receiving special education.

IV. (a) The sum total calculated under paragraphs I-III of this section shall be used to determine the cost of an adequate education which shall be used in each year of the biennium.

(b) The department shall allocate the cost of an adequate education for each municipality by totaling the cost of an adequate education as determined in RSA 198:40-a, I-III for all children who reside in that municipality.

(c) Prior to or coinciding with the first disbursement of each fiscal year under RSA 198:42, the department shall notify a school district of the cost of an adequate education for the pupils in each school within its jurisdiction sorted by the pupil’s municipality of residence. In addition, the department shall furnish to each school district a report showing the cost of an adequate education for pupils who are residents of that school district sorted by a pupil’s school of attendance.

V. The department shall notify school districts of the estimated amounts of grants by the November 15 preceding the fiscal year for which aid is determined. The commissioner shall provide to the general court all data or reports requested by the general court in a form which the general court determines will facilitate the calculations required in this section.

173:6 Use of Differentiated Aid. RSA 198:40-b is repealed and reenacted to read as follows:

I. A school district which receives differentiated aid under RSA 198:40-a, I(b)-(e) for schools within its jurisdiction, shall separately account for such aid as part of its financial accounting procedures. Differentiated 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, drop out 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 differentiated aid under RSA 198:40-a, I(b)-(e) 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 differentiated aid will be used to provide programs approved under paragraph I.

III. A school district which receives differentiated aid for schools within its jurisdiction pursuant to RSA 198:40-a, I-III shall direct such aid to the schools for which such aid was calculated. A school district which receives differentiated 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 differentiated 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.

173:7 School Money; Fiscal Capacity Disparity Aid. RSA 198:40-c is repealed and reenacted to read as follows:

I. In addition to aid for the cost of the opportunity for an adequate education provided under RSA 198:40-b, each biennium the department 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 charter schools approved under RSA 194-B:3-a as follows:

(a) The department shall calculate the equalized valuation per pupil for each municipality in the state and shall sort the results into quartiles based on equalized valuation per pupil and shall divide all quartiles in half. If there are an uneven number of municipalities in a quartile or half quartile, the department shall make the lower quartile or half quartile the one with fewer municipalities.

(b) A municipality with an equalized valuation per pupil in the lower half of the lowest quartile and which has a median family income which is less than the state average median family income shall receive fiscal capacity disparity aid in the amount of $2,000 multiplied by the municipality’s average daily membership in residence.

(c) A municipality with an equalized valuation per pupil in the upper half of the lowest quartile which has a median family income which is less than the state average median family income shall receive fiscal capacity disparity aid in the amount of $1,250 multiplied by the municipality’s average daily membership in residence shall be distributed pursuant to RSA 198:42.

(d) A charter school approved under RSA 194-B:3-a shall receive $2,000 per pupil multiplied by the number of pupils enrolled. The calculation of charter school enrollment and aid distribution shall be pursuant to RSA 194-B:11, I(c).

II. Except as otherwise provided in this section, aid shall be distributed pursuant to RSA 198:42.

(a) “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 average daily membership in residence, as defined in RSA 189:1-d for the determination year, provided that no kindergarten pupil shall count as more than 1/2 day attendance per calendar day.

(b) “Median family income” means the most recent census data published for New Hampshire counties and municipalities by the United States Census Bureau, United States Department of Commerce, as of October 1 preceding the beginning of the biennium for which aid is to be determined.

173:8 New Section; Consumer Price Index Adjustment. Amend RSA 198 by inserting after section 40-c the following new section:

198:40-d Consumer Price Index Adjustment. Beginning July 1, 2011 and every biennium thereafter, the department of education shall adjust the sum of the amounts determined 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.

173:9 School Money; Determination of Grants and Excess Tax. RSA 198:41 is repealed and reenacted 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 amount of the 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 property tax warrant to be issued by the commissioner of revenue administration for such municipality reported pursuant to RSA 76:9 for the next tax year, and from such amount; and

II. 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 amount of the adequate education grant for each municipality as the lesser of the 2 following calculations:

(b) The total amount paid for items of current education expense as determined by the department of education minus the amount of the education property tax warrant to be issued by the commissioner of revenue administration for such municipality reported pursuant to RSA 76:9 for the next tax year.

III. For the fiscal years beginning July 1, 2009 and July 1, 2010, the department of education shall not:

(a) Distribute a total education grant on behalf of all pupils who reside in a municipality that exceeds that municipality's total education grant for the 2009 fiscal year by more than 15 percent; or

(b) Reduce the total state aid for an adequate education provided on behalf of all pupils who reside in a municipality to an amount less than that municipality’s total state aid for an adequate education received in the 2009 fiscal year.

173:10 Excess Education Property Tax Payment. RSA 198:46, I is repealed and reenacted to read as follows:

I. A municipality in which education property tax revenue collected exceeds the amount necessary to fund the cost of an adequate education in a fiscal year, as determined in RSA 198:40-a, shall collect and remit such excess to the department of revenue administration on or before March 15 of the tax year in which the excess occurs.

173:11 School Attendance; Duty of Parent; Version Effective July 1, 2009. 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 [~~equitable~~] adequate education grants under RSA 198:41;

173:12 Charter and Open Enrollment Schools; Funding. Amend RSA 194-B:11, I to read as follows:

I.(a) 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~~] a 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.

(b) For any charter school authorized by the state board of education pursuant to RSA 194-B:3-a, the state shall pay tuition pursuant to RSA 198:40-a and RSA 198:40-c directly to the charter school for each pupil who is a resident of this state in attendance at such charter school [~~as follows:~~

(b) For every fiscal year thereafter, the department of education shall determine the tuition rate by adjusting for the average annual percentage rate of inflation based on the northeast region consumer price index for all urban consumers as published by the Bureau of Labor Statistics, United States Department of Labor. The average shall be based on the 4 calendar years ending 18 months before the beginning of the fiscal year for which the tuition rate is to be determined].

(c) Notwithstanding RSA 198:42, the commissioner of the department of education shall calculate and distribute charter school tuition payments as set forth herein. The first payment shall be 30 percent of the per pupil amount multiplied by the number of eligible pupils present on the first day of the current school year. Such payment shall be made no later than 15 days after the department of education receives the attendance report. The December 1 payment shall be 30 percent of the per pupil amount multiplied by the membership on November 1, and the March 1 payment shall be 30 percent of the per pupil amount multiplied by the membership on February 1. To calculate the final payment, the commissioner of the department of education shall multiply the per pupil amount by the average daily membership in attendance for the full school year, and subtract the total amount of the first 3 payments made. The remaining balance shall be the final payment. Eligible charter schools shall report membership in accordance with RSA 189:1-d. In this subparagraph, “membership” shall be as defined in RSA 189:1-d, II. Tuition amounts shall be prorated on a per diem basis for pupils attending a school for less than a full school year.

(d) The source of funds for payments under this section shall be moneys from the education trust fund established in RSA 198:39.

173:13 Joint Legislative Oversight Committee on Accountability for an Adequate Education.

I. There is hereby established the joint legislative oversight committee on accountability for an adequate education. The members of the committee shall be as follows:

(a) Three members of the house of representatives, which shall include 2 members of the house education committee and one member of the house finance committee, appointed by the speaker of the house of representatives.

(b) Three members of the senate, which shall include 2 members of the senate education committee and one member of the senate finance committee, appointed by the president of the senate.

II. The committee shall review and study the assessment and assistance methods, reporting requirements, and other methods of accountability presently being used by the department of education and local school districts to determine whether such methods, programs, and standards will ensure the delivery of an adequate education as set forth in RSA 193-E:2-a.

III. Following a public hearing, the committee shall report its findings and recommendations concerning the sufficiency of existing statutory law to provide accountability for the delivery of the opportunity for an adequate education as defined in RSA 193-E:2-a, and the possible need for additional legislation, to the governor, the speaker of the house of representatives, the president of the senate, and the state librarian no later than November 15, 2008.

173:14 Joint Legislative Committee on Fiscal Capacity, Transition Aid, and Diseconomies of Scale.

I. There is hereby established a joint legislative committee on fiscal capacity, transition aid and diseconomies of scale. The members of the committee shall be as follows:

(a) Six members of the house of representatives, which shall include 2 members of the house finance committee, 2 members of the house ways and means committee, and 2 at-large members, appointed by the speaker of the house of representatives.

(b) Six members of the senate, which shall include 2 members of the senate finance committee, 2 members of the senate ways and means committee, and 2 at-large members, appointed by the president of the senate.

II. The committee shall study the need for providing fiscal capacity and transition aid to municipalities, as well as additional aid to address the lack of economies of scale in small school districts, and the source of funds for such aid.

III. Following a public hearing, the committee shall report its findings and recommendations concerning the need for fiscal capacity disparity aid, transition aid, and small school district aid, and the need for additional legislation, to the governor, the speaker of the house of representatives, the president of the senate, and the state librarian no later than December 1, 2008.

173:15 References Amended. Amend the following RSA sections by replacing “statewide enhanced education tax” with “education tax”: RSA 21-J:14-h; RSA 76:3; RSA 76:8, I; RSA 76:8, III; RSA 76:9; RSA 83-F:9; RSA 198:46; RSA 198:47; RSA 198:57, III(a); and RSA 198:57, IV(c).

173:16 Severability. If any provision of this act or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the act which can be given effect without the invalid provision or application, and to this end the provisions of this act are declared to be severable.

I. 2005, 257:8, relative to determination of grants and excess enhanced education property tax payments.

II. 2005, 257:23, I, relative to the July 1, 2009 effective date for 2005, 257:8.

III. RSA 198:41, III as inserted by section 9 of this act, relative to total education grants distributed in the 2010 and 2011 fiscal years.

I. Paragraphs I and II of section 17 of this act shall take effect June 30, 2009.

II. Section 8 and paragraph III of section 17 of this act shall take effect July 1, 2011.

Approved: Enacted in accordance with Article 44, Part II of New Hampshire Constitution, without signature of the governor, June 10, 2008.

Effective Date: I. Paragraphs I and II of section 17 shall take effect June 30, 2009.