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Legislature Adopts State Budget  

The legislature adopted a state budget when both the House and Senate approved HB 1 & 2 by super majorities. HB 1 contains the "numbers", state appropriations for funding, and HB 2, the "Trailer Bill", contains companion language necessary for the policies reflected in the appropriations. Combined funding for the biennium is approximately $10.3 billion.

Briefly, the budget level funds a revised Adequate Education State Aid formula for the next two years (FY 2012 and 2013 at the same aid level as FY 2011), the moratorium on new construction eligible for Building Aid is extended for two years, and funding for those existing obligations is fully funded for both 2012 and 2013. Catastrophic Special Education Aid remains underfunded and will be pro-rated. Funding levels for the Tuit & Transp program as well as Dropout Prevention, while less than fully funded, meet the federal maintenance of effort requirement for Perkins funds that support the regional Tech Centers. The following highlights some of these details:  

EMPLOYER RETIREMENT CONTRIBUTION RATES: HB 2, the trailer bill, contains the pension reform legislation that was in SB 3, which was vetoed by the governor. The reform contained in HB 2 requires NHRS to recertify employer contribution rates for fiscal years 2012 and 2013 to reflect the changes made by new legislation, including increases in employee contributions. The employer rates shall be effective as soon as possible, not to exceed 30 days from the approval by the board of the system actuary's recalculation. The language in HB 2 stipulates that the re-calculated rates be based on the demographic and economic assumptions (Assumed Rate of Return) used for the original calculation of the FY 2012 and 2013 rates. Until new rates are certified, the current TOTAL rate for teachers of 10.70% will increase to 13.95%. This past year, with the state paying a 25% share, school districts paid 8.02% for teachers. The budget package adopted by the legislature removes the statutory provision for the state to pay a share of local employer teacher, police and fire contributions. However, included in the budget is a provision only for state fiscal year 2012, funding a state total contribution of $3.5 million on behalf of teachers, police and fire. While we look forward to additional guidance from NHRS, we anticipate that this July school districts will be paying close to the full 13.95%. Retirement reform measures will lower the local rates once the re-calculation and recertification is completed. Preliminary estimates indicate the new teacher rate may be as low as 11.28%. The timing for new rates is critical, but unknown. Beginning in July, a restructured Board of Trustees will replace the current Board, but new appointments will be necessary. Once this Board becomes staffed and assumes responsibilities, it will be possible to take action on recommendations of the actuary regarding changes in employer rates.

Additional language contained in the trailer bill, HB 2, also includes:
-Extends the moratorium on school building aid grants through June 30, 2013.
-Amends the statutes on retirement, incorporating reform provisions previously adopted by the legislature in SB 3 (vetoed by Governor), including increases in employee contribution rates.
-Provides $4.5 million annually in CHINS funding for the most severe cases of those served; children under age 18 who exhibit behaviors that pose a danger to themselves or others.
-$888,395 is contained in HB 1 for FY 2012 to fund the 3rd year of temporary kindergarten facilities. HB 2 authorizes $3.7 million for the biennium, by bonding, to provide kindergarten construction funds for projects approved before July 2013.
-Authorizes, until July 2012, school districts to hold a special meeting in response to changes in state education funding. Meetings are to be called by the governing body (school board) and no petitioned warrant articles are allowed. These same provisions were adopted in HB 650, approved by both the House and Senate but not yet acted on by the governor.
-Eliminates the House proposal for the state board of education to review all administrative rules related to special education to ensure that such rules only require minimum compliance with the federal IDEA.
-Establishes a committee charged with studying the relationship between the Dept. of Education and school districts. The Committee is specifically charged to review the methodology of determining tuition rates for career and technical education programs and the role of state funding in that determination process. The committee shall identify and recommend legislation for changes that will result in state and/or local savings.
-Increases eligible funding for charter schools, allowing the expenditure of up to 110% of budgeted amount to fund the necessary per pupil tuition payments. Further increases are subject to fiscal committee approval.  

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Education Adequacy  

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Pension Reform Update  

SB 3 and HB 2: SB 3, adopted by the legislature, contained comprehensive reforms to the NH Retirement System, including changes to employee retirement age requirements, benefit calculations, and contribution rates. Governor Lynch vetoed this legislation, but all the components of the bill were then included in the budget trailer bill, HB 2, which passed both the House and Senate this week. Reform measures adopted 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. The bill also eliminates the Special Account, transferring approximately $200 million back into the pension fund. Also, the composition of the NHRS Board of Trustees will change in July 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. Also included is a new definition of part-time employees. Beginning in July, "part-time" employees will be subject to a 32-hours/week limit in a normal calendar week, or up to 1,300 hours in a calendar year, so long as such part-time employment does not occur outside of a 5-consecutive-month period. 

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"Spiking" and the 125% Rule  

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Teacher Tenure Reform  

Both the House and Senate adopted SB 196, making changes to NH's 'tenure' laws relative to teacher nonrenewal or nonreelection. The bill increases from 3 to 5 the number of years for a teacher to be eligible for the increased rights provided in 189:14-a, allowing districts more time to assess a teachers performance. In addition, the bill prohibits any binding resolution for nonrenewal grievances, making any such provision null and void upon the expiration date of that collective bargaining agreement. However, provision for locally negotiated binding resolution terms relative to 189:14-a or b are allowed in subsequent contracts, but must be renegotiated for each CBA since any such provision becomes null and void upon the expiration of the contract. The proposal also prohibits "seniority only" RIF clauses, and makes a petition for review by the state board the exclusive remedy on the issue of nonrenewals, unless a negotiated arbitration provision as described above has been agreed to in the CBA. Finally, the bill requires school boards to "have a teacher performance evaluation policy."