State Budget Update
The Senate Finance Committee has been reviewing the budget and will be making recommendations to the full Senate for a vote next week.  Deliberations Saturday and yesterday created concerns with possible funding levels for state aid to education.  The Committee has yet to vote on specific proposals, but committee discussions included the following:

Catastrophic Special Education Aid: Committee deliberations reduced the appropriation another $10 million each year.  The House version funds Cat Aid at $32 and $33 million respectively for 2010 and 2011.  Cutting each year by $10 million would result in a 50% pro-ration of funds compared to the expected need of $42 and $46 million for each year.

Building Aid: Committee members discussed, and agreed upon, the need to fund this important aid program that is based on a partnership with local districts created when the state promises to share in supporting annual payments on construction bonds.  The current budget does not contain the $87.7 million needed to fund this program.

Deputy Commissioner: Committee members discussed un-funding this position for the first six months of FY 2010, assuming the new commissioner would take six months to fill the position when Deputy Commissioner Mary Heath retires at the end of June.

Retirement: Committee deliberations continue to leave intact the House version that reduces the state's share of employer contributions for teachers and Group II employees from 35% to 30% in 2010 and 25% in 2011.  The House raised employee rates to help offset this increased cost, but the Senate Finance Committee proposes deleting that increase, and leaving the full cost shift to be born by local communities.

The Finance Committee will continue to meet today and possibly tomorrow to make decisions on final recommendations.  The Senate schedule designates next Thursday, June 4, as the last day for the Senate to act on any remaining House bill.  Wednesday, June 10, is the last day to create Committees of Conference and Thursday, June 25, is the deadline for Senate action on a Committee of Conference Report.



ACTION ITEM
The pace of budget decisions will quicken and next week the Senate will adopt its version of the budget, which will likely be different from the House version and thus sent back to the House.  Assuming the House doesn't totally agree, a Committee of Conference will be established to work on a compromise that will get approval by both bodies.  School board members should continue to talk with their senator and local representatives, and explain the impact of downshifting costs to the local level.  The current shortfalls this year in Cat Aid and Building Aid, as well as a possible pro-ration next year of as much as 50% in the reimbursement of expenditures already made by districts, forces unexpected impacts on local budgets.  While all senators and representatives acknowledge the importance and need of building aid, the current state budget has no provision for these grants in the next biennium.  The state commitment is an important part of the local bond approval process and loss of this commitment would have a profound impact at the local level.

Board members should also remind their legislators that with respect to district payment of retirement contributions, the State promised to pay 35% of the employer share for teachers, police and firefighters.  House Legal Counsel, David Frydman, has noted, "political subdivisions are protected by Article 28-A from the State reneging on payment of state's 35% share of retirement contributions on behalf of teachers, police and firefighters.  Since it was the arrangement that the State provided when municipalities joined NHRS, it would be an unfunded mandate if the State were to cease payments."

_____________________________________________________________________________