2003 SESSION

03-0362

04/10

HOUSE BILL 628-FN-A-LOCAL

COMMITTEE: Ways and Means

ANALYSIS

This bill:

I. Repeals the state education property tax and provides that those municipalities where the adequate education cost exceeds the locally voted education tax shall receive an education grant from the state.

II. Repeals the excess education property tax payments and the low and moderate income homeowners state property tax relief program.

III. Amends RSA 198:14, relative to determination of the per pupil cost and the amount of the adequate education cost.

IV. Guarantees the state's contribution to the cost of education to all municipalities.

V. Reaffirms local control of school governance.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03-0362

04/10

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Three

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

1 Purpose. The New Hampshire general court recognizes that the initial provisions of the effort to provide funding for the state's share of the cost of an adequate education have resulted in certain inequities in the distribution and use of the state's funds among municipalities. The general court hereby directs certain changes to some of the recent practices regarding adequate education funding to correct these inequities and to assure that every school district will receive the state determined cost of an adequate education.

2 Application of Receipts. Amend RSA 6:12, I(www) to read as follows:

(www) Money received under RSA 77-A, RSA 77-E, RSA 78, RSA 78-A, RSA 78-B, RSA 83-F, [RSA 198:46,] and from the sweepstakes fund, which shall be [credited] deposited to the education trust fund under RSA 198:39.

3 Taxation; What Taxes Assessed. Amend RSA 76:5 to read as follows:

76:5 What Taxes Assessed. The selectmen shall seasonably assess all [state and] county taxes for which they have the warrants of the commissioner of revenue administration and county treasurers respectively; all taxes duly voted in their towns; and all school and village district taxes authorized by law or by vote of any school or village district duly certified to them; and all sums required to be assessed by RSA 33 and RSA 21-J:9-c. Any decision by the commissioner not to certify the assessments of a municipality pursuant to RSA 21-J:11-a shall not affect the authority of the selectmen to assess and correct taxes.

4 Taxation; Commissioner's Warrant. RSA 76:8 is repealed and reenacted to read as follows:

76:8 Commissioner's Warrant.

I. The commissioner shall annually verify the education amount to be raised as authorized by the local votes of each municipality.

II. The commissioner shall issue a warrant for the amount computed according to paragraph I of this section to the selectmen or assessors of each municipality directing them to assess such sum and credit it to the state education trust fund.

5 Taxation; Information Required. Amend RSA 76:11-a, I to read as follows:

I. The tax bill which is sent to every person taxed, as provided in RSA 76:11, shall show the rate for municipal, local education, [state education,] and county taxes separately, the [assessed] valuation of all lands and buildings for which said person is being taxed, and the right to apply in writing to the selectmen or assessors for an abatement of the tax assessed as provided under RSA 76:16. The department of revenue administration shall compute for each town and city the rates which are to appear on the tax bills and shall furnish the required information to the appropriate town or city.

6 Education Trust Fund; Purpose Amended. Amend RSA 198:39, I to read as follows:

I. The state treasurer shall establish an education trust fund in the treasury. Moneys credited to and deposited in such fund shall not be used for any purpose other than to distribute [adequate] education [grants] funds to [municipalities'] school districts serving their municipalities pursuant to the distribution schedule set forth in RSA 198:42[, and to provide education property tax hardship relief under RSA 198:55]. The state treasurer shall deposit into this fund immediately upon receipt:

7 School Money; Determination of Adequate State Grants. RSA 198:41 is repealed and reenacted to read as follows:

198:41 Determination of State Education Grants. The commissioner of the department of education shall determine the amount of an education grant for each municipality as follows:

I. Multiply the average base cost per pupil of an elementary school pupil by the average daily membership in residence for the municipality.

II. Credit the product of paragraph I of this section to the education trust fund established in RSA 198:39.

III. The commissioner of the department of revenue administration shall compare the sum calculated under paragraph I of this section for each municipality to the amount of the locally voted education tax warrant to be issued for each municipality reported pursuant to RSA 76:8.

IV. A school district serving a municipality where the local education tax warrant is less than the sum computed under paragraph I of this section shall qualify for a state grant which, when added to the amount of the locally voted education tax warrant, shall provide such municipality with the state determined cost of an adequate education.

V. A school district serving a municipality where the local education tax warrant exceeds the sum computed under paragraph I of this section shall receive a credit 100 percent of the locally voted education tax amount.

8 School Money; Distribution Schedule. RSA 198:42 is repealed and reenacted to read as follows:

198:42 Distribution Schedule of State Education Grant; Appropriation.

I. The state education grant determined in RSA 198:41 shall be distributed to each municipality's school district or districts legally responsible for the education of the pupils who attend approved public schools within the district or in other districts or who attend approved programs for educationally disabled children, as the case may be, from the education trust fund in 4 payments of 20 percent on August 1, 20 percent on September 1, 30 percent on January 1, and 30 percent on April 1 of each school year; provided that for a dependent school district, the grant determined in RSA 198:41 shall be distributed to the municipality, which shall appropriate and transfer the grant funds to its dependent school department.

II. For the fiscal year beginning July 1, 2003, and every fiscal year thereafter the amount necessary to fund the grants under RSA 198:41 is hereby appropriated from the education trust fund created under RSA 198:39 to the department of education according to the formula set forth in RSA 198:41. The governor is authorized to draw a warrant from the education trust fund to satisfy the state's obligation under this section. Such warrant for payment shall be issued regardless of the balance of funds available in the education trust fund. If the balance in the education trust fund, after the issuance of any such warrant, is less than zero, the commissioner of the department of administrative services shall inform the fiscal committee and the governor and council of such balance. This reporting shall not in any way prohibit or delay the distribution of state education funds.

III. The department of education shall certify the amount of each payment to the state treasurer and direct the payment thereof to the school district. When a payment is made to a school district, the municipality on whose behalf the payment is made, shall receive notification from the state treasurer of the amount of the payment made to its school district or districts.

9 School Money; Maintenance of Local Control. RSA 198:48 is repealed and reenacted to read as follows:

198:48 Maintenance of Local Control. Local education funding shall include sufficient local revenue to meet local school financial commitments including, but not limited to, bond issues, contracts with teachers, school employees, service providers and suppliers, articles of agreement, and court ordered payments. Distributions under RSA 198:42 shall be based only on the cost amounts as determined under RSA 198:41 and are independent of how the school districts decide to spend the distributions or other funds they may raise for education. Notwithstanding any other provision of law, nothing in this subdivision is intended in any way to limit or control how school districts operate or spend their budgets.

10 Alternative Kindergarten Programs. Amend RSA 198:48-a, VII-VIII to read as follows:

VII.(a) Upon the effective date of this paragraph, and for each fiscal year through June 30, 2003, an adequate education grant of $1200 per pupil shall be distributed to school districts, from the education trust fund created in RSA 198:39, for the education of its resident kindergarten pupils enrolled in an approved alternative kindergarten program established under this section.

(b) Once pupils enrolled in an approved alternative kindergarten program have been counted in the average daily membership in residence, school districts shall receive, for each such pupil, an adequate education grant calculated in accordance with [RSA 198:40 through RSA 198:42] RSA 198:41.

VIII. Notwithstanding the provisions of this section, alternative kindergarten programs which were approved and in effect prior to April 29, 1999 may continue to operate and shall continue to receive per pupil adequate education grant amounts in accordance with [RSA 198:40 through RSA 198:42] RSA 198:41.

11 Repeal. The following are repealed:

I. RSA 76:3, relative to the education property tax.

II. RSA 76:9, relative to report by the commissioner of the department of revenue administration.

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. RSA 198:39, I (g), relative to excess education property tax payments deposited into the education trust fund.

V. RSA 198:40, relative to the determination of the per pupil cost of an adequate education.

VI. RSA 198:46-47, relative to excess education property tax payments and forms for reporting excess education property tax payments.

VII. RSA 198:56-61, relative to low and moderate income homeowners property tax relief.

12 Effective Date. This act shall take effect 60 days after its passage.

LBAO

03-0362

Revised 2/19/03

HB 628 FISCAL NOTE

FISCAL IMPACT:

METHODOLOGY: