May 21, 2010 NHSBA Legislative Bulletin

Fiscal Year 2011 Budget Reductions: SB 450 and HB 1128
After lengthy debate the House and Senate will be negotiating differing proposed FY 2011 budget reductions/adjustments contained in HB 1128 and SB 450. The House version relies on budget cuts and several increased taxes, while the Senate version reduced taxes but included a new revenue source: an estimated $80 million in video lottery machines. Both bills include approximately $4.8 million impacting specific reductions in state aid to local school districts. Catastrophic aid is reduced by $3,946,405, resulting in a distribution of this aid that is expected to be approximately 79% of entitlements. Other state aid cuts include $607,993 in Tuit & Transp; $128,065 in Dropout Prev; $39,903 in Local Ed Improvement; $23,942 in Statewide Spec Educ; $9,178 in Career Tech Student Orgs. Additional proposed education cuts include $65,000 to eliminate the Parent as Teacher program; a $15,961 reduction in school nutrition reimbursements for breakfast; a $102,920 reduction in support of adult education programs; and a $240,420 reduction in expenditures for state assessments. Both bills also include a provision for Special School District Meetings next year. For FY 2011, a special meeting of a school district can be held upon the majority vote of the school board for the purpose of addressing changes in catastrophic aid funding. Another funding change included in both bills is the $160 million of ARRA money being used for Adequate Education Grants. Originally, $80 million was used for FY 2010 and another $80 million for FY 2011; both bills transfer next year's $80 million appropriation for FY 2011 to be used for the current 2010 fiscal year.

The House version also includes a further reduction in the state share of teacher, police and fire retirement contribution rates next year; the state share would drop another 5%, down to 20%, downshifting another $9.4 million on local budgets. This provision is not contained in the Senate version.
House conferees named by the House Speaker are Representatives Marjorie Smith (Durham), Dan Eaton (Stoddard), Sharon Nordgren (Hanover), Neal Kurk (Weare), and Linda Foster (Mont Vernon). Alternates are Representatives Randy Foose (New London) and Doug Scamman (Stratham).
Senate conferees named by the Senate President are Senators Lou D'Allesandro (Manchester), Kathleen Sgambati (Tilton), Harold Janeway (Webster), and John Gallus (Berlin). Alternates are Senators Maggie Hassan (Exeter), Deborah Reynolds (Plymouth), Sylvia Larsen (Concord), and Bob Odell (Lempster).
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Adequacy Aid Update - SB 465 and Collar Extension Rejected
The Senate version of SB 465, relative to the adequacy aid formula, extended the collar/hold harmless transition period one year. The House amended version did not allow for any such extension, or provision that would prevent approximately 40 communities from paying approximately $15.7 million in 'excess' statewide property tax payments (donor towns). The House version did allow those districts anticipating less adequacy aid in FY 2012 compared to what is received in FY 2011 to carry forward an unreserved fund balance in fiscal years 2010 and 2011. These funds would then be used to offset the FY 2012 tax rate. Also included was provision for a committee to study the sustainability of the existing state programs for funding K-12 education, including adequate education grants, fiscal capacity disparity aid, and catastrophic aid. The Senate did not concur with these changes, and requested a committee of conference to negotiate a compromise. On a 170-118 vote, the House rejected that request, refusing to negotiate and thereby killing the bill.
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Special Education Liability for Parentally Placed Students
The House adopted an amended version of SB 520, addressing continuing concerns over the financial liability for special education services when a child has been "parentally placed" in a school outside the child's district of residence. The bill clarifies that a child's district of residence remains the legally liable and financially responsible district, and allows for a contractual agreement between the two districts. The Senate nonconcurred and requested a committee of conference on the bill. It is anticipated that House and Senate conferees can resolve questions relative to implementation.
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Building Aid Suspension - SB 486
SB 486, as adopted by the Senate, implements a 1-year suspension on building aid, providing that no school building aid be made for projects approved on or after June 30, 2010 through June 30, 2011. This temporary 1-year suspension is to allow for the redesign of the building aid program with a plan to ensure its long-term sustainability. The bill places significant emphasis on the work of the Committee to Study the School Building Aid Grant Program, which is to submit a final report with recommendations for proposed legislation by December 1, 2010. The Senate version increases the membership of that committee by one additional senator and one additional representative. The House version is in basic agreement, but further requires that one of the three senators on the committee be a member of the senate education committee, and two of the four representatives be members of the house education committee. A committee of conference has been created to resolve these minor differences.
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Pooled Risk Management Programs - HB 1393
The Senate amendment to HB 1393 proposes recommendations impacting Pooled Risk Management Programs, specifically the Local Government Center Health Trust, PRIMEX, and SchoolCare. The Senate version, in addition to making changes to the laws regarding investment trusts, provides for: 1) the Secretary of State to have exclusive authority to investigate and impose penalties on pooled risk programs, and 2) requires the Secretary of State, in consultation with the insurance commissioner and an actuary, to submit a report by January 1, 2011, with recommendations concerning any limitation on reserves in pooled risk management programs and limitations on administrative expenses as a percentage of claims. The House refused agreement to these changes and nonconcurred, requesting a committee of conference. Testimony on behalf of both sides was presented at a work session held this morning (Friday).

ACTION ITEM
Amidst a flurry of speculation and misleading claims, much attention has been focused on the reserves and operations of these insurance programs. Current policies regarding cash reserves of these organizations are set by boards consisting of local municipal and school representatives and based on standard actuarial formulas. The Senate version of HB 1393 would give the Secretary of State regulatory authority over these programs that provide health, property, liability, and worker's compensation insurance to municipalities, school districts, and counties. The goal of pooled risk programs is to provide high-quality insurance at a cost effective price, as well as stability in the rates. These services are, and have been, provided by the state's pooled risk organizations. They are owned and governed by their members for the exclusive benefit of their members. Local officials are uniformly opposed to this change and have not expressed any support for the bill. It is hoped that changing the original attempt to place arbitrary limits on reserves with a study will allow for input from these organizations and provide more clarity and understanding of how the operations benefit members. Concern remains as to why all investigatory power, and the study, is placed with the Secretary of State rather than the insurance department. Please contact your local senator and representatives and urge their support of the study alternative, but if regulation/oversight is needed, it should be within the insurance department, as is the case in all 24 states where Pooled Risk Management Programs are currently regulated (23 states do not have such regulation).
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House and Senate Action on Agreement to Bills
The following bills received House and Senate agreement, and now go to the governor for signature.

HB 1411, requiring notice to educational support personnel and non-certified school district employees. The House concurred with the Senate amendment that added a statement intended to clarify that giving such notice is not a binding commitment of the district.
HB 1523, revising the statute on pupil safety and violence prevention to include intimidation, bullying, and cyberbullying. The House concurred with the Senate changes that included charter schools and public academies, and clarified training and education requirements of the bill.
SB 396, restricting the use of child restraint practices in schools and treatment facilities and establishing certain notification requirements regarding the use of such practices. The Senate concurred with the House amendment that clarified reporting requirements.

SB 504, extending the effective date for the implementation of the retirement system employer assessments for excess benefits (spiking) to July 1, 2011. The Senate concurred with the House amendment that corrected a technical statutory reference in the bill.

Governor Lynch has singed into law HB 1157, relative to the appointment of a deputy treasurer. The bill amends RSA 197:24-a and allows a school district treasurer to appoint a deputy treasurer, subject to approval by the school board, who shall perform the duties of the treasurer in case of the treasurer's absence by sickness, resignation, or otherwise. This revision to the statute becomes effective on July 6, 2010.