_________________________________________________________
Schedule

Crossover:

Thursday, March 31, is fast approaching.  This is the deadline in the state legislature for House Bills to go to the Senate, and Senate Bills to the House.  Speaker O'Brien has scheduled next Tuesday, Wednesday and Thursday as session days to consider a lengthy list of bills, and next Wednesday's Senate session will likely be prolonged.  As a result, both the House and Senate have relatively 'light' committee schedules next week, except for Finance, which continues to work on budget issues.

__________________________________________________________ 

State Budget

HB 1and 2, the state budget and trailer bill, had a packed hearing on Thursday, with the Finance Committee receiving comments regarding the Governor's proposals. As noted in the February 18 Bulletin, proposed cuts in state aid to school districts next year alone exceed $66 million. In addition, the elimination of the state share of retirement contributions would impact school districts by almost $50 million next year. Unlike losses in state aid, revenues that off-set property taxes in support of local budgets, the loss of the state retirement share results in an increase in expenditures. The state share of retirement rates is paid to the retirement system, with local districts billed the balance. If the state doesn't pay its share, local districts will be required to pay the increase. Without a change in the voted appropriation, districts will have to make cuts elsewhere in the budget to save the money necessary to fund this new required expenditure. On July 1, the total employer contributions on behalf of teachers will increase from 10.70% to 13.95%, a 30% increase in the total rate. But if the state share is eliminated and districts pay the entire rate, the effective increase on the local rate is 74%. 

ACTION ITEM

It is important to make your local representatives and senator aware of the impact these proposals have on your local budget. Contact your legislators and let them know the amount of state aid that helps support your budget, and how an increase in the local share of retirement contributions affects budget appropriations that have already been voted. In order to make significant cuts to save the funds necessary to meet the new required cost of retirement, staff reductions will be necessary. The teacher notification date of April 15 is only a month away. Districts will need to have a plan in place to accommodate these new expenses.  

__________________________________________________________ 

Education Funding

In the Senate

SB 183, amending the calculation and distribution of adequate education grants, repealing fiscal capacity disparity aid, and providing stabilization grants to certain municipalities, was adopted on a voice vote in the Senate. The bill sets the amount of differentiated aid at $1,725 for each pupil eligible for the free or reduced-price meal program, maintains the $675/pupil for English language learners and $1,856 for special education pupils, provides an additional $675 for each third grade pupil who has not tested at the proficient level or above in the reading component of the state assessment and who is not eligible to receive the current special education, English as a second language, or free or reduced-price meal program funds. A "hold harmless" provision is contained in a stabilization grant to certain municipalities in fiscal year 2012 equal to the decrease from the municipality's fiscal year 2011 total education grant, and provides that a municipality shall continue to receive this stabilization grant in fiscal year 2013 and each fiscal year thereafter. Beginning July 1, 2013, provision is allowed for grants to increase by up to 5.5% percent over the previous fiscal year. The bill also repeals the statutory provisions requiring that excess education tax payments be remitted to the department of revenue administration thereby permitting municipalities to retain any excess education tax revenues.

In the House  

HB 337, as amended, has been recommended Ought to Pass and is scheduled for a House vote next week. The bill: 1) level funds Adequacy Grants at current funding levels with a hold harmless provision, but allows for possible future increases in aid based on changes in student population, 2) replaces the Free/Reduced Meal targeted aid provision to a flat $1,725 grant per eligible student IF attending a school with at least 12% of the student population eligible for Free/Reduced meals, 3) modifies several provisions of how the base cost of adequacy is determined biennially, such as using beginning salaries for teachers, staff and administrators with no experience, and 4) would eliminate all donor towns.

Constitutional Amendment  

CACR 12: House Speaker O'Brien's proposed amendment has been recommended Ought to Pass on a 12-2 vote and is scheduled for a House vote next week. The proposed amendment gives the general court "full discretion to define reasonable standards for elementary and secondary public education, to establish reasonable standards of accountability therefore, and to mitigate local disparities in educational opportunity and fiscal capacity. Further, in the exercise thereof, the general court shall have full discretion to determine the amount of, and methods of raising and distributing, State funding for education."    

ACTION ITEM

Contact your local representative and urge their opposition to this proposal. Specifically share NHSBA's resolution that opposes any effort to amend the constitution in such a way that is contrary to the current interpretation of, and court rulings in, both the Claremont and Londonderry decisions. School board members struggle daily with the oversight of implementing education programs for our children in public schools. This oversight comes within parameters established both by law and rulemaking, with minimum standards in such areas as curriculum and length of school year. The state is a partner in this venture, and adequate education funding plays an integral role in the support and delivery of education to our children. 

Most constitutional amendment supporters claim there is a need to "target" state aid. However, "Targeting" is already legal and has been included in our recent Adequacy formulas. The only need for a Constitutional Amendment is to provide 'Targeting' in place of the current base commitment to ALL children, thereby implying that some children in NH are not entitled to a state basic commitment of an adequate education. The proposal seeks to allow providing aid to certain communities at the expense of other, less "needy", communities. While a few outliers of towns in our state may be given as examples of high income and/or low property taxes, the simple fact is that the bulk of our communities are not wealthy towns. Different measures of wealth (property wealth, income wealth, percent of students at-risk, etc.) simply result in different rankings: it is only a relative position on a continuum.

Many of our middle tier communities have been here before, and have experienced the uncertainty that can result from not knowing one year to the next whether they "fall off" the funding continuum or remain as a receiver of needed state aid. The reality is that the majority of districts in our state rely on state funding to help implement the educational programs offered within their schools. Significantly reducing the amount of aid directed to these communities will place significant strain on the local property tax, if those lost

__________________________________________________________ 

Pension Reform

In the Senate

SB 3, as amended, has been recommended Ought to Pass by the Senate Executive Departments and Administration Committee on a 4-1 vote, and is scheduled for full Senate consideration next Wednesday. 

ACTION ITEM

It is important to let senators know that school boards strongly support these reform measures, as expressed in our adoption of a resolution at January's Delegate Assembly. Please contact your local senator and share your support for these reform measures that will help ensure the viability and sustainability of our public retirement system.

The retirement system has seen its total unfunded liability increase from $2.7 billion in 2007 to nearly $4.75 billion. While state retirement systems should maintain stability with at least an 80% funding level, NH's system is struggling at 58%. The recent growth in our share of teacher contribution rates is not sustainable, and the retirement system is likely to lower the assumed rate of return on investments, which will further increase our employer rates. In 2007 we were able to make needed changes to the funding methodology. That has enabled us to look at the true financial picture of NHRS. As our liabilities continue to grow, we now need to make revisions to the benefit side of the equation and control what our commitments will be in the future. We ALL need a reliable and sustainable public pension system that serves the interests of BOTH employees and employers. The reform measures in SB 3 will help us achieve that goal. They have almost no impact on current retirees, little impact on vested members, with most changes impacting new hires and non-vested members.