nhsba

Legislative Bulletin
June 19, 2009

A Brief Summary of Education Issues at the State House

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State Budget Update - HB 1 and HB 2
Early Friday morning, closure came to budget negotiations as the Committee of Conference reached consensus on a balanced budget and voted to recommend adoption in both the Senate and House next week when both bodies meet on Wednesday, June 24, to consider all conference committee reports.
 
The negotiations were lengthy and involved several late-night sessions.  Major disagreement over revenue sources created funding dilemmas for an already tight budget.  Senate conferees favored gambling to plug the revenue hole, while House conferees supported various new taxes.  When Revenue Administration Commissioner Kevin Clougherty provided new and higher estimates (over $70 million) for existing revenue sources, the path toward agreement was opened.  A myriad of higher fees and expansion to existing taxes helped fill the gap, and negotiations ultimately closed with a balanced budget.
 
State aid to education was subject to cuts, as was everything else.  Adequacy grants are fully funded, including charter school students, subject to a voluntary agreement made with the Virtual Learning Academy Charter School (VLACS).  The agreement stipulates that the state will fund up to 500 fte students in 2010 and 580 in 2011 at the virtual school.  $160 million in Stimulus money will be used to fund increases in the Adequacy formula ($80 million each year).  Catastrophic Special Education aid was cut another $3 million for the biennium.  Funding is now proposed at $30.57 million in 2010 and $31.43 million in 2011, compared to entitlements of $41.9 and $46.1 for 2010 and 2011 respectively.  This reimbursement aid program for severely handicapped children will be prorated at approximately 73% in 2010 and less than 70% in 2011.  Building aid remains fully funded at $44.94 and $46.26 million for 2010 and 2011 respectively, but funding was removed from the general fund.  It is proposed to bond $40 million of FY 2009 building aid, as well as the $91 million for 2010 and 2011, but NOT in the capital budget.  Instead, proceeds from the Rooms & Meals tax will be dedicated for payment of the annual bonding obligation.  Tuition and Transportation ($7.33 and $7.55 million compared to entitlements of $8.34 and $9.17 million respectively), $3.6 million in kindergarten construction, $1.75 million for each year in dropout prevention, and $485,000 in 2010 and $500,000 in 2011 for Local Education Improvement, all remained at initial levels proposed by Governor Lynch.
 
Both building aid and charter school funding received considerable attention during committee negotiations.  Concern over ever-increasing state building aid obligations as well as rapidly increasing "on-line" enrollments at VLACS and how students are counted, prompted the adoption of the following provisions:
-Building Aid: A legislative committee is to be established to study the goals, procedures and operations of the state's building aid program, the sources of revenue and amounts of state funding, as well as eligibility criteria.  An interim report is due by December 15, 2009 with a final report by November 1, 2010.
-Charter Schools: (1) A nine-member task force is established to study the state funding for VLACS and review what the cost is to the state for students who are dual-enrolled at their local resident school, and what potential savings may be associated with these students.  In addition, determine VLACS cost/pupil to provide courses and review what is necessary to provide continued support to VLACS in a manner that eliminates dual payment by the state and is fair and equitable to school districts.  A report is due by December 15, 2009.  (2) The Commissioner of Education, and the Director of the Office of Economic Stimulus, are directed to consult with federal authorities and determine the degree to which the state may amend existing state laws, regulations and policies with regard to controlling the growth of enrollment in public charter schools without affecting state eligibility for federal Stimulus funds.  A report is due by December 15, 2009.
 
With respect to retirement and the state's share of local employer contribution rates, the proposed budget reduces the state payment on behalf of local political subdivisions from the current $55.5 million down to $53.78 in 2010 and $46.84 in 2011.  These funding levels correspond to reductions in the state share from the current 35% to 30% in 2010 and down to 25% in 2011.  In addition, the budget eliminates a $16.9 million liability it owes the NHRS medical subsidy account that is funded by public employers, including school districts.  This drop in state funding requires the certification of new retirement rates to be effective this July, increasing the local share to offset the reduction in state payments.  The new rates will shift approximately 0.60% onto the local teacher rate in 2010, and approximately 1.21% onto the local teacher rate in 2011.  There will also be an increase on employee rates to account for the lost $16.9 million state OPEB liability.
 
NEXT STEPS
Both the House and Senate are scheduled to meet next Wednesday, June 24, at 10:00.  Committee of Conference reports will be considered at that time.  Thursday, June 25, is the last day to act on Committee of Conference reports.
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Retirement "Spiking" - HB 641 and SB 108
HB 641, relative to the determination of employer assessments for excess benefits paid by employers in the retirement system.  The House conferees agreed to the Senate language that would require the New Hampshire Retirement System (NHRS) to develop a specific methodology for individuals retiring after July 1, 2010, that determines the amount of the employer assessment for excess benefits provided above base pay.  The retirement system will submit a report regarding the methodology no later than December 1, 2009.  In addition, every employer shall annually report the annual base pay of each member to the NHRS.
 
SB 108, establishing a committee to study the imposition of assessments to retirement system employers for excess benefits paid to retirees.  House and Senate conferees agreed to language creating a committee to study the law requiring the imposition of assessments to retirement system employers for excess benefits paid to retirees, including earnable compensation of members.  The committee shall explore alternatives to the spiking assessment formula and to the so-called load factor assessed to retirement system employers.  An interim report is due November 1, 2009, and a final report on or before November 1, 2010.

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For the complete text of any bill, go to the general court web site and enter the bill number, e.g. HB114, SB38 or CACR2 (no spaces!), and make sure the Session Year is 2009.
 
For more information on specific legislation, please call Dean Michener, NHSBA Director of Governmental Affairs at 603-228-2061, or email: [email protected].

 

Dean Michener
NHSBA Director of Governmental Affairs