HB 0748

AN ACT relative to instructional and operational costs of providing an adequate education.

I. Provides for a division between the instructional and operational costs of providing an adequate public education and requires that the state shall be responsible for the costs of instructional services provided for an adequate education.

II. Provides that local school districts shall be responsible for the operational costs of providing an adequate education which shall include pupil transportation, building maintenance, school district administration, extracurricular activities, and school lunch programs.

III. Decreases the rate of the education property tax from $6.60 on each $1,000 of the value of taxable property to $4.60 on each $1,000 of the value of taxable property.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

AN ACT relative to instructional and operational costs of providing an adequate education.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Purpose; Intent. The general court finds that the duty of the state is to provide an opportunity for every child to receive an adequate elementary and secondary education. Educational competence is accomplished through capable and thoughtful instruction. It shall be the responsibility of the state to provide educational instruction. This responsibility includes instructional costs related to providing an adequate education including, but not limited to, classroom teachers, classroom materials, professional development, building aid, and special education costs.

76:3 Education Property Tax. An annual education property tax at the uniform rate of [~~$6.60~~] $4.60 on each $1000 of the value of taxable property is hereby imposed on all persons and property taxable pursuant to RSA 72 and RSA 73, except property subject to tax under RSA 82 and RSA 83-F.

3 State Board of Education Rulemaking Authority Amended. Amend RSA 21-N:9, II (l) to read as follows:

(1) Special education programs affecting all educationally disabled individuals, as authorized by RSA 186-C:5[,] and 186-C:16 [~~and 186-C:18, V~~].

4 Special Education; Educationally Disabled Children in State Institutions. Amend RSA 186-C:19, II to read as follows:

II. For an educationally disabled child in a state institution, the responsible school district shall be liable for all expenses incurred in administering the law in relation to educationally disabled children except as follows: For the 1982 and 1983 fiscal years, the responsible school district's annual financial liability for a child who was enrolled at the Laconia state school and training center as of July 1, 1981, shall not exceed the applicable state average per pupil cost as determined by the state board of education, and the state shall be liable for the balance of such costs[~~, which shall in no case be taken from the $ 10,000,000 appropriated for state aid under RSA 186-C:18~~]. If more than one school district is liable for such a child during a single fiscal year, the total annual financial liability to the school districts shall not exceed the applicable state average per pupil cost, said liability to be prorated on a per diem basis. For such a child who is enrolled at Laconia developmental services for less than a full year, the liability for such costs shall be prorated on a per diem basis by Laconia developmental services.

5 Pupils; Compulsory Attendance Amended. Amend RSA 193:1, I (c) to read as follows:

(c) The relevant school district superintendent has excused a child from attendance because the child is physically or mentally unable to attend school, or has been temporarily excused upon the request of the parent for purposes agreed upon by the school authorities and the parent. Such excused absences shall not be permitted if they cause a serious adverse effect upon the student's educational progress. Students excused for such temporary absences may be claimed as full-time pupils for purposes of calculating [~~state aid under RSA 186-C:18 and~~] adequate education grants under RSA 198:41.

6 Statewide Education Improvement and Assessment Program; Duties of the Legislative Oversight Committee Amended. Amend RSA 193-C:8 to read as follows:

193-C:8 Duties of the Legislative Oversight Committee. The oversight committee shall:

I. Review the development and implementation of the program to ensure that they are in accordance with legislative policy. Implementation of the program shall be in conjunction with the committee's review.

II. Review the provisions of RSA 198:40, in the second year of each biennial session, and recommend any legislation necessary to modify such provisions.

7 School Money; Reimbursement Anticipation Notes Amended. Amend RSA 198:20-d to read as follows:

198:20-d Reimbursement Anticipation Notes. Notwithstanding any other provision of law to the contrary, a school district or a city with a dependent school district may incur debt in anticipation of reimbursement [~~under RSA 186-C:18 and~~] under RSA 198:42. The governing body, after notice and public hearing, may elect to borrow such funds and to recognize the proceeds of the borrowing as revenue for property tax rate setting purposes by providing written notification to the commissioner of the department of revenue administration stating the specific amount of borrowing to be recognized as revenue. Any borrowing under this section shall be exempt from the provisions of RSA 33, relative to debt limits.

8 School Money; State Aid for Educational Adequacy; Definition Amended. Amend RSA 198:38, X to read as follows:

X. "Average daily membership in residence" and "resident pupils" mean the average daily membership in residence as defined in RSA 189:1-d, IV except that no kindergarten pupil shall count as more than 1/2 day attendance per calendar day.

9 New Paragraph; School Money; State Aid for Educational Adequacy; Definitions Amended. Amend RSA 198:38 by inserting after paragraph XI the following new paragraph:

XI-a. "Adjusted average daily membership in residence" for a municipality shall be determined by dividing the total statewide average daily membership in residence, as calculated by adding the average daily membership in residence of each municipality in the state, by the total number of weighted pupils statewide, as calculated in paragraph VII of this section. The result shall be multiplied by the number of weighted pupils in a municipality.

10 School Money; Instructional Costs of Providing an Adequate Education. RSA 198:40 is repealed and reenacted to read as follows:

I. For the fiscal year beginning July 1, 2002, and every fiscal year thereafter, the essential elements of an adequate education shall be:

(e) Special education services sufficient to provide a free and appropriate education to special needs pupils.

(g) Adequate classroom space for instruction; and including school building and educational administration building construction and renovation.

II. For the fiscal year beginning July 1, 2002, and every fiscal year thereafter, the cost of the essential elements of an adequate education as set forth in paragraph I shall be calculated as follows:

(a) The state shall be responsible for the cost of instructional services necessary to provide an adequate education to all public elementary and secondary school pupils. Each school district in the state shall receive an amount equal to $42,500 multiplied by the most recent available adjusted average daily membership in residence for the school district, the product of which shall be divided by 20.

(b) The state shall be responsible for the cost of professional development of instructional staff. Each school district in the state shall receive an amount equal to not less than $50 per pupil multiplied by the most recent available adjusted average daily membership in residence for the school district.

(c) The state shall be responsible for the cost of sufficient classroom materials, textbooks, and other instructional supplies. Each school district in the state shall receive an amount equal to $100 per pupil multiplied by the most recent available adjusted average daily membership in residence for the school district.

(d) The state shall be responsible for the cost of instructional technology to facilitate quality instructional technology to facilitate quality instruction in all public elementary and secondary schools. Each school district shall receive an amount equal to not less than $50 per pupil multiplied by the most recent available adjusted average daily membership for the school district.

(e)(1) The state shall be responsible for the cost of programs and services for educationally disabled children in public elementary and secondary schools of the state. The department of education shall determine the cost of programs and services for educationally disabled children using information from the most recent available DOE-25 report. Ninety percent of the cost determined in this subparagraph shall be distributed to school districts on a per pupil basis as calculated by the most recent available average daily membership in residence in each school district.

(2) An extraordinary special education fund is hereby established in, and shall be administered by, the department of education. Beginning July 1, 2002, and every fiscal year thereafter, not less than 10 percent of the cost of programs and services for educationally disabled children as determined in subparagraph (e)(1) shall be transferred from the education trust fund to this fund in each fiscal year. The moneys in this fund shall be non-lapsing. The state board of education shall adopt rules, pursuant to RSA 541-A, relative to prescribing forms to be used to apply for funds under this paragraph, administering and distributing extraordinary special education funds, and school districts applying for aid from the extraordinary special education fund. Under guidelines established by rules of the state board of education, the funds shall be used for the following purposes:

(A) School districts shall submit their extraordinary special education costs to the state board of education by June 30 of each fiscal year. The state board of education shall then verify the cost and distribute the appropriate amounts for the previous fiscal year on or before January 1 of each fiscal year.

(B) School districts shall submit their limited-English-proficient programs and services costs to the state board of education by June 30 of each fiscal year. The state board of education shall then verify the cost and distribute the appropriate amounts for the previous fiscal year on or before January 1 of each fiscal year.

(C) Upon approval of the state board of education, the department of education may use up to $200,000 in any fiscal year from the extraordinary special education fund for administration of the extraordinary special education fund and for management and coordination of special education programs or services that are statewide in their scope. Upon approval of the state board of education, the department of education may use up to $800,000 in any fiscal year from the extraordinary special education fund for grants to school districts for special education programs or services that are statewide in their scope.

(3) Not more than $2,000,000 from the extraordinary special education fund in each fiscal year shall be used to provide early literacy and reading improvement assistance to school districts to help students in kindergarten through grade 3 to read and write at grade level by the end of grade 3; to provide, develop, and evaluate outcome-proven programs and courses; and to provide technical assistance and professional development activities through grants, contracts with consultants, and employment of individuals to fill authorized, program-related positions. The administration of the early literacy and reading improvement program shall involve the following:

(A) Establishing forms and procedures for districts to use for the development and submission of early literacy and reading improvement grant requests, including:

(i) A detailed plan and budget, with the opportunity to request up to 3 years of financial assistance primary school professional development; and the further opportunity to apply for additional assistance based on demonstrated need.

(ii) An assurance that grant funds will be used only to supplement and not supplant on-going local efforts.

(iii) A description, if applicable, of how grant activities were planned in consultation with, and will be implemented in coordination with the goals of the initiative.

(i) Includes an evaluation of each proposal's adequacy, educational appropriateness, and cost effectiveness, and the extent to which additional revenues are required to implement the proposed plan and activities.

(ii) Gives priority to districts with lower-performing schools in reading and which are proposing reasonable efforts to address early literacy needs and/or improve reading performance.

(D) Reviewing grant requests with recommendations for approval, including level of funding and, to the extent possible, balanced geographic distribution.

(E) Distributing grant payments to school districts in accordance with an established payment schedule specified in the district's grant approval notification.

(G) Evaluating the educational impact of the early literacy and reading improvement program on reading skill and comprehension in students in kindergarten through grade 3.

(H) The state board shall, pursuant to RSA 541-A, and not later than July 1, 2002, adopt rules relative to the administration of the early literacy and reading improvement program established in this paragraph.

(4) A school district that receives state funding for special education under this paragraph shall apply for all available federal assistance for educationally disabled pupils, including any funds available through the Medicaid program. The state board of education shall adopt rules, pursuant to RSA 541-A, to implement this requirement.

(5) Moneys from the extraordinary special education fund shall be used to reimburse school districts for the cost of transportation of vocational education pupils who reside in the district, in accordance with the distribution schedule in subparagraph (e)(2).

(f) The state shall be responsible for providing supplemental assistance to needy school districts. The department shall determine the amount of supplemental assistance to be distributed pursuant to the following formula:

(1) Divide each municipality's total equalized valuation by its average daily membership in residence. The result shall be the municipal valuation per pupil.

(2) From the list of municipal valuations per pupil calculated in subparagraph (1) where the municipal valuation per pupil is greater than zero, determine the median. This result shall be the state median municipal valuation per pupil.

(3) For each of the municipalities where the municipal valuation per pupil is less than the state median municipal valuation per pupil, subtract the municipal valuation per pupil from the state median municipal valuation per pupil and divide the result by the state median valuation per pupil. Multiply this result by the municipality's average daily membership in residence. This shall be the municipal valuation differential.

(5) For each of the municipalities where the municipal valuation per pupil is less than the state median valuation per pupil, divide the municipal valuation differential by the sum of all municipal valuation differentials determined in subparagraph (4) and multiply the result by 75,000,000. The product shall be the amount of supplemental assistance distributed to each school district.

(g) The state shall be responsible for making grants available under the school building aid program set forth in RSA 198:15-a through 198:15-h.

(h) The state shall be responsible for other salaries, materials, programs, or services which are deemed in legislation to be instructional in nature and necessary for the provision of an adequate education.

III. State aid for instructional costs of providing an adequate education shall be paid to school districts legally responsible for the education of pupils who attend approved schools within the district or in other districts. Payment of such state aid for instructional costs shall be made during the fiscal year in which such aid is due.

IV. State aid for instructional costs of providing an adequate education shall be disbursed to school districts in the form of block grants.

V. Beginning July 1, 2003, and every July 1 thereafter, state aid for instructional costs of providing an adequate education as defined in paragraph II of this section shall be increased by 3 percent unless the general court decides otherwise.

VI. Nothing in this section shall be construed to affect, alter, or modify the provisions of RSA 198:43 relative to additional education expenditures, and RSA 198:48, relative to maintenance of local control.

11 New Section; Operational Costs for Providing an Adequate Education. Amend RSA 198 by inserting after section 40 the following new section:

I. In addition to the provisions set forth in RSA 194, the school districts of this state shall be responsible for the operational costs of providing an education to all elementary and secondary school pupils. Such operational costs shall include, but are not limited to the following:

(c) School district administration, including the costs of maintaining a school administrative unit pursuant to RSA 194-C.

II. A school district shall be responsible for any other programs which the school district determines are necessary to meet local educational goals and objectives.

12 School Money; Determination of Adequate Education Grants Amended. Amend RSA 198:41, I to read as follows:

I. Except for municipalities where all school districts therein provide education to all of their pupils by paying tuition to other institutions, the department of education shall determine the amount of the adequate education grant for the municipality as follows:

(a) [~~Multiply the average base cost per pupil of an elementary pupil by the weighted average daily membership in residence for the municipality;~~

~~(b) Add to the product of subparagraph (a), 70 percent of the municipality's apportioned transportation cost;~~] Add the sums resulting from the calculations set forth in RSA 198:40, II. Reimbursements made under RSA 198:40, II(d)(2) shall be counted in the school year in which such reimbursements are made.

[~~(c)~~] (b) Subtract from the sum of subparagraph [~~(b)~~] (a) the amount of the education property tax warrant to be issued by the commissioner of revenue administration for such municipality reported pursuant to RSA 76:9 for the next tax year.

I. RSA 186-C:18, I-III, V(a)-(e), VI(a), and VII-X, relative to state aid for special education.

III. RSA 198:38, V-VI, relative to the definitions of "base expenditure per pupil," and "average base cost per pupil of an elementary school pupil."

IV. 1999, 338:21, relative to the repeal of the education property tax and the determination of per pupil adequate education costs.

V. 1999, 338:22, relative to the repeal of education property tax hardship relief.

VI. 1999, 338:25, I-II, relative to the effective dates of the repeals of the education property tax, the determination of per pupil adequate education costs, and the education property tax hardship relief.

The Department of Education indicates this bill, as amended by the House, will decrease state education trust fund expenditures and local revenue by $65,332 in FY 2003, and will increase state education trust fund expenditures and local revenue by $92,650,000 in FY 2004 and by $92,585,000 in FY 2005. There will be no impact on state and county revenue or county and local expenditures.

· This bill changes the way pupils are weighted for the percentage of pupils receiving free and reduced meals, while at the same time providing a hold harmless provision that ensures no district will receive less than it received in FY 2002.

· This bill introduces a new base cost formula. The Department re-scaled the scores on the statewide assessment program and as a result, the cost of an adequate education will decrease significantly starting in FY 2004. The districts that are selected by the existing formula will change and produce a lower base cost. The new base cost formula will select the school districts whose cost approximates that of those that would have been chosen if the scores were not re-scaled.

· This bill introduces an alternative base cost formula based on the New England CPI averaged over the previous four years and states the Department shall use the lower of the two base cost formulas. The base cost shown in the schedule below reflects the one computed with the CPI formula which is lower than the amount generated by the new base cost formula discussed above.

· This bill requires the Department to reduce transportation costs by transportation revenue before paying 70% of transportation costs.

The Department of Education assumes Chapter Law 338:21, Laws of 1999 will not go into effect. Effective January 2, 1993, Chapter Law 338:21 repeals RSA 198:40 and 198:41, relative to the method of determining per pupil adequate education cost and adequate education grants.

A comparison of changes from current law with the re-scaled scores to this bill is shown below for FY 2004:

FY 2004

Current Law With

Re-scaling HB 748 Difference

Elementary and High School ADM-R $ 213,863 $ 213,863

Special Education Weighting 27,492 27,492

Free and Reduced Weighting 17,417 -

Total $ 258,772 $ 241,355

Base Cost 3,109 3,480

Total $804,522,148 $839,915,400 $35,393,252

70% of Transportation 48,039,490 48,039,490

Less Transportation Revenue - (538,435) (538,435)

Free and Reduced Hold Harmless - 57,794,829 57,794,829

Total $852,561,638 $945,211,284 $92,649,646