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__________________________________________________________ Senate Endorses School Funds Retention Bill
SB 373, authorizing a school district to retain funds for emergency expenditures or to reduce the tax rate, passed the Senate on a 17-6 vote. The enabling legislation allows a school district at an annual meeting to adopt an article authorizing, indefinitely until specific rescission, the school district to retain any year-end unassigned general fund balance, up to maximum of 2.5 percent of the net property tax assessment, for the purpose of having funds on hand to use as a revenue source for emergency expenditures and overexpenditures under RSA 32:11, or to be used as a revenue source to reduce the tax rate. This bill reflects a specific resolution adopted by the NHSBA Delegate Assembly last January.
ACTION ITEM
Please contact your House Representative and express your support for this bill. Such a provision, once approved by the local legislative body, will allow a revenue source for emergency expenditures, as well as the ability to smooth out variations in local property taxes when responding to reductions in state and/or federal revenue.
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Spiking and the 125% Penalty Assessment
SB 228, repealing the provisions that establish assessments for excess benefits to be paid by employers in the retirement system, passed the Senate on a voice vote. The bill seeking to continue the penalty fee, SB 246, which modified and maintained the penalty assessment, was killed with a voice vote of Inexpedient to Legislate. SB 228 has been referred to the Senate Finance Committee for further review.
ACTION ITEM
Please continue to let your senator know your support for this action. The Senate Finance Committee will make a final review of SB 228, which repeals the flawed pension spiking provision scheduled to take effect on July 1, 2012. Retirement reform measures adopted last year impacting non-vested and new employees will, over time, address the issues concerning pension "spiking", and school boards have also begun implementing severance package limitations in their negotiated contracts. Please contact your Senator and urge passage of SB 228 to repeal the spiking provision.
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Senate Education Committee Reviewing "Real Time Data" Proposal for Adequacy Grants
SB 401 as introduced requires the use of current fiscal year data for average daily membership pupil counts for the calculation and distribution of adequate education grants. NHSBA opposed this bill because it presents unique problems for school districts. Not all districts have the capacity and technology to provide "real time" current year attendance reports as the basis for the Dept. Education to make Adequacy payments. But the primary problem with the proposal is that it creates uncertainty and volatility in the revenue stream to school districts. This is highlighted by a section of the bill that states, "During the course of the school year, the commissioner may make adjustments in grant payments necessitated by variations in the ADMA data for a school district." In response to testimony at the public hearing, a proposal to use "1 year old" data is under review. Specifically, ADM data would be used from the school year immediately preceding the school year of the grants distribution. This still means that the prior year's November estimate of adequacy grant amounts would not be 'firm', since the ADM count would not be finalized until the following spring/summer. The proposal attempts to limit that 'variation' by no more than 5% of the district's estimated total education grant amount. While allowing more time for data review and submission, this change still leaves districts in the uncertain position of not being able to rely on the prior year's 'notice' of the amount of adequacy aid, which would be "adjusted" in the final April payment.
ACTION ITEM
Please contact your senator and express your opposition to this bill. In general, school districts have requested, and received, advance notice of state revenue dating back to the Foundation Aid formula. By law, the Dept. Educ. must notify school districts of the amount of adequacy grants by November 15 PRECEDING the fiscal year for which the aid is given. This allows districts to have the information for budgeting and to inform the legislative body for the March vote on a budget. Following budget adoption, contractual obligations can be determined, such as the April 15 deadline for teacher notices. Allowing state revenue to vary during the course of the following school year, especially AFTER tax rates are set in October, puts school boards in a very difficult position in terms of managing the budget. An NHSBA continuing resolution was adopted in response to such uncertainty, stating our opposition to unpredictable changes in funding that result in information coming to the school district after budgets are adopted.
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Education Tax Credits: HB 1607 and SB 372
Continued modification to these two bills progresses with most focus on HB 1607, currently under review by a subcommittee of the House Ways & Means Committee. Current versions establish an education tax credit against the business profits tax and/or the business enterprise tax for businesses that contribute to scholarship organizations that award scholarships (vouchers) to be used by students to defray the educational expenses of attending a nonpublic school or for limited home education expenses. Eligible students are any pupils currently attending a public school, including a charter school, those who already received a scholarship in the prior school year, or any student from a household where the income is less than or equal to 300% of the federal poverty guidelines. The Dept. Educ. will use SASIDs to determine the number of pupils receiving scholarships and who were counted in the calculation of the ADM attendance for a school district, and for each such pupil, shall deduct their adequacy aid from the total amount distributed to the district. This calculation shall be completed prior to September 1 of the year in which grants are made, but obviously AFTER budget adoption. Fiscal impacts prepared by the Department of Education estimate a $7 million loss to school districts. At the last subcommittee meeting, support was expressed for a "phase-in" approach, which would allow dealing with unintended issues and "working out the details". A possible 3-year phase in, at a maximum of $4 million in tax credits, will be presented to the subcommittee's next week. In addition, it was also suggested that stronger language is needed to prevent businesses from attempting to "target" scholarship funds based on making contributions.
ACTION ITEM
Please contact your local legislators as well as members of the House Ways and Means Committee and the Senate Education Committee, expressing your opposition to these bills. Diverting money from the state and local districts for private school purposes is the bottom line of this legislation since tax credits reduce the tax liability dollar for dollar. Local districts will see no reduction in their expenses and fixed costs when small numbers of K-12 students leave the public school, yet will still be required to forfeit $4-$7 million in adequacy funds. It is hard to understand why the legislature would consider a proposal to reduce revenues while not currently paying the bills it owes. Rather than diverting scarce tax dollars away from our public school classrooms, NHSBA urges the legislature and congress to support improvements in our public schools and meet current funding obligations and promises.
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Defined Contribution Plan and the NHRS
SB 229 as introduced establishes a defined contribution retirement plan for public employees and requires the issuance of a request for proposals for plan administration. Beginning November 1, 2012, all new hires participating in NHRS shall be enrolled in the public employee defined contribution plan. The bill has remained under review in the Senate ED&A Committee since the public hearing in early February. While Defined Contribution plans have certain appeal, NHSBA remains concerned that given our current unfunded liability and concurrent transition costs, including payments on behalf of new hires but dedicated for the "defined benefit plan unfunded liability", the NHRS actuary's analysis shows higher costs associated with the new proposal. School district contributions for teachers are projected to INCREASE by $529,502 in FY 2013; $1,306,653 in FY 2014; $2,532,267 in FY 2015; and $3,538,554 in FY 2016. The analysis also shows that a shortfall in payments to the unfunded liability would require an increase in employer rates needed to cover a projected shortfall of over $237 million over the next 26 years. Proposed amendments in response to these concerns, including a proposal to totally amend HB 1460, changing it to a bill establishing a Defined Contribution Plan, still leave increased costs to be born by the public employer. A shortfall on the pension funded status due to the change to a DC plan is now projected at $83 million, with over $72 million shortfall for teachers, requiring an increase in employer contribution rates. In addition, under current GASB rules when the Defined Benefit plan becomes a closed group (no new members), the actuaries believe contributions on the unfunded accrued liability may no longer be based on a level percent of payroll, but a level dollar method reflecting the declining payroll of the closed active population of the (DB) plan. This results in an estimated increased cost of over $100 million to public employers in the first year alone.
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Special Education Services in Chartered Public Schools
SB 300 requires a chartered public school to make available a free and appropriate public education to all children with disabilities by making available to the child all special education programs and services that are available to the child in the child's school district of residence. A proposed amendment includes both the district and charter school on the IEP team, and offers several options for how services may be provided. But the bill also includes provisions that require a child to receive services at the charter school (unless otherwise stipulated in the IEP). Language also included states that school districts have the financial and administrative responsibility to ensure the provision of special education services.
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