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House Endorses Study of School Vouchers and School Choice

On Wednesday, the House adopted an amended version of SB 67 on a 273-100 roll call vote. The bill will establish a committee to study the implementation of an education tax credit plan in NH. The charge to the committee is to study the authorization of an education tax credit plan that could include a credit against the Business Profits Tax for cash contributions from businesses to support the education of students at nonpublic schools. Also included is a charge to study the establishment of tax-exempt scholarship granting organizations that would award grants to offset the cost of attending nonpublic schools. An interim report and recommendations for legislation would be due this November (2011), with a final report due in November 2012.

The bill now returns to the Senate, which may concur, nonconcur, or request a committee of conference.

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Spending/Tax Cap Proposal Before the House Next Week

SB 2, relative to adoption of spending caps by municipalities, has been scheduled for a House vote next Wednesday, June 1. The proposal to allow local governments the ability to adopt spending caps includes traditional and official ballot (aka SB 2) district meetings as well as city and town charter forms of government. The enabling legislation allows districts and towns to adopt the provisions of a new section added to the municipal budget law (RSA 32). Local adoption of a tax cap may be either a fixed dollar amount or a fixed percentage applied to the taxes raised in the prior fiscal year. While the cap would apply to the budget submitted by the governing body (school board), the legislative body (district meeting) is not similarly restricted and may increase, or decrease, the amount of any appropriation or the total amount of all appropriations. 

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Tenure Reform

SB 196 was passed by the House, making needed changes to our "tenure" statutes. The House amended the bill, so it returns to the Senate for concurrence. NHSBA supports this bill and the changes made that streamline the appeal process for teacher nonrenewals, and excluding any binding arbitration resolution to grievances on nonrenewals. It also prohibits RIF clauses based solely on seniority (see last week's Bulletin for more information). The bill is waiting for Senate action to either concur, nonconcur and kill the bill, or go to a Committee of Conference.

ACTION ITEM

It is important to contact your local senator, voicing your support for this proposal and urging the Senate to concur with the House version. The bill restores many provisions that existed from 2003 - 2008 and were based on findings of a task force created by Governor Shaheen. Increasing from 3 to 5 years for a teacher to be eligible for the increased rights provided in 189:14-a allows districts more time to assess a teacher's performance, and how well they will "fit" in the district and are likely to succeed. This longer probationary period also makes sense due to the potential for incurring expensive costs for poor performing employees. It also allows us to keep an employee for 2 years when uncertain as to whether the new employee should be given such "tenure" status, and may have been terminated without the benefit of an additional 2 years. Teachers still have rights: the bill requires written notice, and the option for a teacher to request reasons and a hearing. At a hearing, the Superintendent must still prove their case by "a preponderance of the evidence".

The bill prohibits any binding resolution for nonrenewal grievances, preventing "back door" paths to grieve nonrenewals when local contracts clearly excluded such arbitration from the nonrenewal provisions of the contract. These are local issues requiring local solution, not some outside 3rd party making binding decisions on districts. Teachers still have the right to appeal to the state board, which can overturn erroneous decisions.

Finally, prohibiting "seniority only" RIF clauses will help keep the best teachers in our classrooms working with students.

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State Budget Update

HB 1 & 2: The Senate Finance Committee completed its deliberations on the budget. Final details in the proposal are expected late Friday afternoon, and Senate Finance Chair Morse will be giving a briefing to senators next Tuesday. The Senate Finance Committee recommendation will go before the full Senate next week. The committee proposal level funds adequacy at FY 2011 amounts for the next two years and increases funding available for charter schools. The moratorium on building aid is continued, with the state fully funding those commitments that already exist. Catastrophic aid is funded at the House proposed level, and Tuition and Transportation aid, as well as dropout prevention, were increased by over $3 million for the biennium to meet the federal maintenance of effort requirement for Perkins funding for the regional tech centers. The CHINS program was restored enough to fund approximately 50 of the most severe cases of the total 450 youths served by the program. Just under $4 million in funding for kindergarten construction commitments was included by bonding. Eliminated from the proposed budget is the Dept. of Education review of Special Education rules that exceed federal requirements, the study of the relationship between the Dept. of Education and local school districts to determine more efficient operations, and the collective bargaining provisions that had been a major focus during the House consideration.

While deliberations on retirement reform continued beyond the Senate Finance committee deadline for completing its budget proposal, the Finance Committee chose to include the senate version of retirement reform and corresponding savings that are expected to impact the budget. Notable was the committee's decision to totally eliminate the state share of retirement contributions on behalf of local governments for teachers, police and fire. This decision was based on assumed net savings in retirement due to increased employee contribution rates, elimination of the special account and changes to the benefit structure. The state is hoping to realize savings on the order of $60 million, comparable to the value of the state's direct payment of a 25% share on teacher, police and fire local government contributions.

The current employer contribution rate for teachers is $10.70. This year, school districts paid $8.02, and the state paid 25%, or $2.68. This July, the employer rate for teachers will increase to $13.95. IF the state contributed 25%, school districts would pay $10.46, a 30% increase. Anticipated savings due to retirement reform will lower the total employer rate, but at this point we are not sure by how much. Conferees on the retirement bill have agreed to a re-calculation of the employer rates, but until the retirement and budget negotiations are completed, we will not know the extent to which employer rates will be lowered. However, without any state share of local contribution rates, the actual payment by school districts on behalf of teachers may be somewhat less or no different than the amounts already certified. The result for school districts is that with retirement reform, increases in rates will be moderated, but without any state contribution, any actual local savings may be significantly less or none, since local governments may now be paying the entire state share.

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Pension Reform Update

SB 3: The Committee of Conference on SB 3 continues to meet with further work scheduled for next Tuesday. Significant lack of agreement persists on part-time employment and return to work issues. Tentative agreement has been reached on several areas that primarily impact non-vested members. Non-vested members and new hires have changes in their years-of-service requirement, with Group I teachers and employees not being able to collect a pension until age 65. Earnable compensation will no longer include unused pay of any kind (vacation or sick pay) nor any longevity or severance pay. Average Final Compensation (AFC) will be based on the average of the 5 highest years. Employee rates will increase starting in July: from 5% to 7% for Group I employees and teachers. Tentative agreement also exists for elimination of the Special Account and transferring approximately $200 million back into the pension fund. Also, the composition of the NHRS Board of Trustees will change in August to a 13-member board: 4 employee representatives (Group I employees, Group I teachers, Group II police, Group II fire), 4 employer representatives (school, town, county and state), 4 non-member 'experts', and the state treasurer. Quarterly reports, describing Board actions, changes to actuarial assumptions, and returns on investments are to be provided to the legislature.

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Education Adequacy

When the House meets next week, it will take up both the Special Committee on Education Funding proposed amendment to the Adequacy formula, SB 183, as well as the Senate adopted position on a constitutional amendment.

SB 183 amends the calculation and distribution of adequate education grants. The committee recommendation replaces the senate language with most provisions contained in HB 337 as passed by the House. It also provides additional funds for each third grade pupil who has tested at the proficient level or above in the reading component of the state assessment, with a comparable reduction of funds for each such pupil who does not test at the proficient level in reading. The bill continues to contain a hold harmless provision ensuring that municipalities receive the same level of funding for fiscal years 2012 and 2013 that they received in FY 2011.

Meanwhile, this week the Senate amended the House version of Adequacy, HB 337, with language reflecting the Senate position previously adopted in SB 183. A committee of conference is likely to result.

Constitutional Amendments

CACR 14 is scheduled for a House vote next week without any committee recommendation. This bill reflects the language adopted by the Senate, giving the legislature the authority to define education standards and accountability, mitigate local disparities in educational opportunity, and have full discretion to determine the amount of state funding for education. The House version, CACR 12, received a Senate Internal Affairs Committee recommendation to re-refer, keeping the bill in the committee. That recommendation goes to the full Senate next week.