nhsba

New Hampshire School Boards Association

Legislative Bulletin

June 30, 2011

  

NHSBA's Last Weekly Bulletin of the 2011 Legislative Session

The legislature has completed its work for the first year of the biennium. Neither the House nor Senate is currently scheduled to meet. Any next session is "at the call of the chair", likely sometime next fall, when possible consideration of governor Lynch's veto of the "Right-to-Work" bill may also occur. Work on retained and re-referred bills, as well as various study committees, will be done over the next few months, usually completed by November with any recommendations for action in the second-year session (2012).  

__________________________________________________________ 

2011 House Bills Retained in Committee Include the Following:  

EDUCATION COMMITTEE

CACR 8, relating to education. Providing that the legislature shall have the power to authorize schools.

HB 179, establishing a task force to study the formula for determining adequate education grants to school districts.

HB 219, establishing a committee to study the abolishment of the department of education.

HB 296, relative to procedures for juvenile delinquency petitions filed by a school district or school official.

HB 301, amending the home education statutes.

HB 318, reducing a school district's liability for special education costs.

HB 545, repealing the department of education's rulemaking authority for home education programs.

HB 595, amending the compulsory school attendance statutes to permit parent-directed instruction programs and repealing the home education statutes.

HB 604, relative to the procedures for approval of plans, specifications, and costs of school building construction or renovation.


LABOR, INDUSTRIAL AND REHABILITATIVE SERVICES COMMITTEE

HB 582, relative to communication between employers and employees during bargaining negotiations.  


SPECIAL COMMITTEE ON EDUCATION FUNDING REFORM

CACR 7, relating to education funding. Providing that the general court shall distribute funds in the manner that it determines will best promote an equal opportunity for an adequate education.

HB 233, restricting judicial review of state education trust fund distributions.

HB 533, establishing a cap on the amount of school building aid grants distributed in each fiscal year.

HCR 26, declaring that the Claremont case's mandates that the legislative and executive branches define an adequate education, determine its cost, fund its entire cost with state taxes, and ensure its delivery through accountability, are not binding on the legislative and executive branches.


SPECIAL COMMITTEE ON PUBLIC EMPLOYEE PENSIONS REFORM

HB 227, relative to the membership of the retirement system board of trustees.

HB 265, redefining earnable compensation in the retirement system for new and non-vested members in service.

HB 460, relative to the retirement age for group II members.

HB 463, relative to the retirement system maximum initial benefit limitation.

HB 465, relative to the number of years for calculating average final compensation for retirement system benefits.

__________________________________________________________ 

2011 Senate Bills Re-referred to Committee Include the Following:

EDUCATION COMMITTEE

HB 528, requiring school districts to develop a facility maintenance and capital improvement program.

 

FINANCE COMMITTEE

SB 181, relative to distribution of funds for education.

INTERNAL AFFAIRS COMMITTEE

CACR 6, relating to taxation. Providing that a 3/5 vote is required to pass legislation imposing new or increased taxes or license fees, or to authorize the issuance of state bonds and providing that the general court shall appropriate funds for payment of interest and installments of principle of all state bonds.

CACR 12, relating to public education. Providing that the general court shall have the authority to define standards for public education, establish standards of accountability, mitigate local disparities in educational opportunity and fiscal capacity, and have full discretion to determine the amount of state funding for education.

__________________________________________________________ 

Proposed Education Constitution Amendments

Two constitutional amendments relative to the Claremont/Londonderry court decisions received the most attention this year.  The House adopted CACR 12, and the Senate adopted CACR 14.  Both proposals give 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.  Disagreement exists over the word "responsibility", specifically that the legislature has a responsibility with respect to these issues.  CACR 12 was re-referred back to the Senate Internal Affairs Committee, and CACR 14 was laid on the table in the House.

__________________________________________________________ 

Update on Employer Retirement Contribution Rates

The following update is a response to numerous questions regarding clarification on school district retirement contribution rates.  Employer retirement contribution rates on behalf of employees and teachers are certified by NHRS, and are based on analyses by actuaries.  The actuaries base the rate on 1) funds raised by the employee rate, 2) investment returns, 3) the balance needed to fund the system, which then determines the employer rate.  The actuaries complete their analysis and report to the NHRS Board of Trustees, and the Board ultimately certifies rates for employers.

 

NHRS has certified the rate of 13.95% for employers of teachers.  The new budget also (almost) eliminates any state share ($3.5 million allocated for FY 2012 only).  However, the increase in employee rates, as well as some changes to benefit structure, will result in lowering the rate needed.  The NHRS actuary has been charged with re-calculating the rates based on the new law (effective July 1).  Preliminary estimates indicate that the teacher rate could be as low as 11.28% if the same assumed rate of return of 8.5% is again used to calculate the FY 2012 and 2013 rates, or 13.58% if the new lower rate of return of 7.75%, adopted last fall for FY 2014 and 2015 rates, is used for the re-calculation.  During the state budget deliberations in committee of conference, legislators were working to get close to a local employer rate of 10.46% for teachers (75% of 13.95).  HB 2 stipulates use of the same assumed rate of return (8.5%) that was originally used to determine the FY 2012 and 2013 contribution rates.

 

So what does all this mean?  First, beginning July 1, local employers will be paying the entire certified rate of 13.95% for teachers.  The actuaries will be completing a new report to show the effect of the new legislation, and will determine the required NEW rates for employers.  That may well take a month or two.  That report will then be presented to the new NHRS Board of Trustees, who will then CERTIFY new rates for employers.  The NHRS Board meets monthly.  The new legislation requires, "such employer contribution rates shall be effective as soon as possible following July 1, 2011 as approved by the board of trustees. The recertification of employer contribution percentages by the board shall be effective when provided to each employer within a reasonable period of time not to exceed 30 days from the approval of the recalculation by the board of trustees."

 

Further guidance will be forthcoming from NHRS, but school districts can expect to pay the 13.95% until the new rates are certified.  The new rates are anticipated to apply PROSPECTIVELY, i.e. there will likely be no 'credit' or 'acknowledgement' of any 'overpayment' made based on paying the original 13.95%.  There will likely be a new rate that becomes effective on a certain date in the fall, and districts will pay that new rate thereafter.

 

HOWEVER, a complicating, and still "unknown", factor is the action of a coalition of the state's unions, which filed an injunction in court this week.  The court filing seeks to prevent the increase in employee rates. The basis for filing the injunction is a challenge on the constitutionality of changing the contribution rates for vested employees who would pay more into the system without a commensurate benefit in return.  The court filing also challenges the basis for the new law's re-calculation/recertification of employer rates, objecting to the language requiring any recalculation to not use a changed assumed rate of return until fiscal year 2014.  This court action could potentially bar a recalculation, leaving districts to pay the full current teacher rate of 13.95% for the next two years.

___________________________________________________________

For the complete text of any bill, go to the general court web site and enter the bill number, e.g. SB1, HB34 or CACR3 (no spaces!), and make sure the Session Year is 2011.

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 Dir. of Governmental Affairs