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Education Tax Credits: HB 1607 and SB 372
HB 1607 was recommended Ought to Pass as Amended (OTP/A) by the House Ways & Means Committee on a 16-5 vote. The Committee recommendation will go to the full House for a vote next week. The bill establishes an 85% education tax credit against the business profits tax and/or the business enterprise tax for contributions to scholarship organizations that award scholarships (vouchers) to defray the educational expenses of attending a nonpublic school or for limited home education expenses. The House bill incorporates a 3-year phase-in, with a maximum of $3.4 million in tax credits for the first year, $5.1 million in the second year, and $6.8 million subsequently. Since the Dept. Educ. will be identifying students who were in the ADM count for adequacy payments, and deducting those aid amounts for students leaving the public school with a voucher, estimated losses in Adequacy aid payments to school districts are $3.9 million in the first year, $5 million in year 2 and $5.5 million in year 3. These reductions come after both budget adoption and the start of school.
SB 372 received a favorable Ought to Pass as Amended vote (15-9) in the Senate. While basically similar to HB 1607, the Senate version does not contain a "phase-in", allowing an aggregate of $6.8 million in tax credits. Fiscal impact statements prepared by the Department of Education estimate more than a $7 million loss in state aid to school districts since the Dept. of Educ. will determine reductions in state aid during the summer and prior to the Sept. 1 payment of Adequacy Aid. This bill was then referred to the Finance Committee for a final review, and that Committee's recommendation, on a 4-3 vote, is Interim Study. The full Senate will vote on the recommendation next Wednesday.
ACTION ITEM
Please contact your local senator and legislators, 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. Local districts will see little or no reduction in their expenses and fixed costs when small numbers of 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 amended to a study, passed the Senate on a voice vote and was referred to the Finance committee for final review. The bill establishes a Study Commission to make recommendations on whether the current NHRS system should be replaced with a defined contribution plan for all new hires, including an appropriation of $100,000. . (See this Bulletin from last week for a brief description of the Commission and its duties.) The Commission's report is due on or before December 1, 2013. Senate Finance has recommended deleting the $100,000 appropriation.
HB 1460 was recommended Ought to Pass as Amended (OTP/A) by the House Special Committee on Pension Reform on an 11-4 vote. The Committee recommendation will go to the full House for a vote next week. The amended bill implements a Defined Contribution Plan, essentially mirroring the original version of SB 229. NHSBA remains concerned with the increased transition costs associated with the plan. A report by the NHRS actuary states that employer contributions toward the unfunded liability is higher under the Defined Contribution plan, estimating a shortfall in employer contributions of $83 million which would require increasing employer rates. In addition, closing the Defined Benefit plan results in a gradually shrinking pool of older members, requiring investments with less risk and thus a lower rate of return. Estimates of this impact show the total liability increasing by $1.2 billion with total employer contribution rates increasing by 3.97%. Finally, the proposed change will likely cause a different methodology for actuaries to calculate the "Annual Required Contribution (ARC)", resulting in an increase of $222 million for the next biennium. These issues are better addressed in a thorough study as proposed in SB 229.
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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 this week and now goes to the House for consideration.
ACTION ITEM
Please continue to let your local representative know your support for this bill, 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 representative and urge passage of SB 228 to repeal the spiking provision.
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Constitutional Amendment
CACR 12,as described in last week's Bulletin, was rejected by the House, but with a request to the Senate for a Committee of Conference. This week the Senate agreed to the House request, but President Bragdon has yet to name Senators to serve on the committee.
CACR 8, scheduled for a House vote this week, was again put off for another week, to be considered next Wednesday. This proposal stipulates that local communities shall make adequate provision at their own expense for their schools, provided that the legislature may supplement that provision in the manner and degree that the legislature finds most beneficial to the general good. The House will be voting on the Committee recommendation of Ought to Pass.
ACTION ITEM
Contact your 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. The state is a partner in providing education, and state funding plays an integral role in its support and delivery. Significantly reducing the amount of state aid will place even more strain on the local property tax, if those lost revenues are indeed replaced. If not replaced but followed by budget cuts, losses and reductions in educational programs will lead to fewer educational opportunities for our youth.
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Charter Schools and Special Education
SB 300 was recommended OTP/A by the Senate Education Committee. The bill's intent is to establish a procedure for the provision of special education and related services for students choosing to enroll is a state authorized charter school. Language offered by the Dept. Educ. places financial responsibility on the resident school district, and further states that the charter school shall be considered the least restrictive environment. Under federal law, for charter schools not approved by the local district, the state would have financial responsibility, but may transfer that responsibility to local districts. Under our NH constitution, such a transfer represents a clear violation of the unfunded mandate provision. The full Senate considers the bill next Wednesday.
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Local Authority over Curriculum Challenged
HB 1403 as introduced would allow a parent or guardian to withdraw a child from a school district that adopts the international baccalaureate program. Responding to concerns over the IB program, the House Education Committee is proposing to require that school curriculum and instruction shall only meet school approval standards if such curriculum and instruction promotes state and national sovereignty and is not subject to the governance of a foreign body or organization. The bill also establishes a committee to study issues relating to the International Baccalaureate program in New Hampshire. The OTP/A recommendation will be considered by the full House next week. NHSBA is concerned that such a requirement could supersede decisions of local school districts in their choice of curriculum and instructional methodology, and impact districts that may have already adopted such programs and methods.
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Regional School Boards and Budget Committees
HB 1175 passed the House and has been referred to the Senate Education Committee. The bill makes the school board member of a cooperative school district budget committee a non-voting member. A hearing has not yet been scheduled.
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School Attendance and Legal Residence for Children of Divorced Parents
HB 1325 was recommended OTP/A and goes before the full House next week. The bill states that in a divorce decree, or parenting plan, the legal residence of a minor child is the residence of the parent with whom the child resides, however the child may attend school in the school district in which either parent resides.
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Management of Concussion and Head Injury in Youth Sports
SB 402 was recommended OTP/A and goes before the full Senate next week. The bill requires school districts to develop policies for the management of concussion and head injury in youth sports and limits a school district's liability for injuries when following local policy.
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