By GARRY RAYNO, InDepthNH.org
CONCORD — The House Education Funding Committee voted down party lines in favor of a state-imposed local school district budget cap, and for a universal voucher program without the restrictions proposed by Gov. Kelly Ayotte.
They voted nearly unanimously to boost state aid for special education services and catastrophic aid and to bring the administration of the Statewide Education Property Tax in line with a Superior Court judge’s ruling declaring the current collection process unconstitutional.
The House will vote on the five bills March 13 as all need to go to the House Finance Committee for review before final approval.
Universal Vouchers
House Bill 115 drew the most discussion, some of it contentious at times, as the majority Republicans approved a plan that would raise the salary cap to participate in the Education Freedom Account program from 350 percent of the federal poverty level to 400 percent for the 2025-2026 school year, and to eliminate the cap for the 2026-2027 school year and beyond.
The bill would not change current eligibility so that students currently in private and religious schools and homeschooled would be able to receive state taxpayer paid grants that currently average about $5,200 but may be as high as $8,670 per student without having been in a public school for a year before being eligible as Ayotte proposed.
Committee chair Rep. Rick Ladd, R-Haverhill, and former chair, Rep. David Luneau, D-Hopkinton, dueled over the cost of opening up the EFA program to all New Hampshire students, with Ladd saying the costs would be much less than the $100 million figure that has been floated, saying out-of-state students in private schools, current EFA students and every homeschooled student in the state are included in that figure.
He said the projection in the second year when the cap is removed would be about $17.5 million.
But Luneau said using the Department of Education’s figures for state students attending non-public schools and homeschooled, would indicate the cost would be $102 million at a time when lawmakers cannot find enough money to help property poor communities in the state with education costs.
He said his figure is for the state’s potential exposure, and said not all of those students would be using EFAs, but he said, using the department’s data on the phase out grants to schools losing students to the EFA program, indicates only 5 percent have left public schools for the grant program, and the Children’s Scholarship Fund’s most recent 990 filing with the IRS indicates it has an outstanding liability of $1 million to the state, noting many students are leaving the EFA program and returning to public schools.
The Children’s Scholarship Fund NH administers the EFA program for the state, collecting a 10 percent fee.
But Ladd said ultimately it is not about the money, it is about giving students who do not do well in the public school environment a place to go if they have been bullied or harassed, or fail to respond in a traditional education setting.
“I am a strong advocate for public education and will continue to be that,” Ladd said, “but I am also a strong advocate for students who are not served well by that system.”
The wisest thing is to keep in mind what is the best fit for every student, he said.
Rep. Hope Damon, D-Croydon, noted EFA students are not tracked in New Hampshire like public school students, but in other states where they were tracked, “the outcomes have been dismal compared to public schools.”
A number of those states have stopped tracking the students in voucher programs because of the comparisons, she noted.
At a minimum the bill ought to include requiring tracking the students and annual means testing to ensure the students’ parents qualify for the program, she said.
“Our taxpayer dollars, which we can’t find enough of for public education,” Damon said, “(are) OK to give this stipend to wealthy families so their children get to go to those schools whether they get the stipend or not.”
But Rep. Pam Brown, R-Kingston, said Damon must be reading different reports. To claim EFAs are a welfare program is absurd, she said.
“I did not say that,” Damon said.
“The constitution says we should cherish education, not cherish the monopoly,” Brown said, where there is DEI and inappropriate material.
Some EFA students are achieving maximum success with greater gains in math and for English learners, she said.
“To claim it is unaudited is a false statement,” Brown charged.
The proposal was approved by a party line 10-8 vote.
Budget Cap
House Bill 675 would have doubled the statewide property tax, required communities collecting excess revenue beyond the cost of providing an adequate education to their students to send that money to the state, and imposed a statewide public education budget cap tied to the consumer price index increases over a five-year average and the average daily enrollment of the school district.
On Tuesday Rep. Dan McGuire, R-Epsom, introduced an amendment that removed everything but the budget cap, saying his constituents’ biggest complaint is their property taxes, and this was a solution to the constantly increasing school portion of property tax bills.
“There is very little correlation between performance and spending, but there is a strong correlation between spending and property taxes,” McGuire said. “…will limit the growth of that spending and limit the growth of property taxes.”
But Luneau argued the cap would lock in the great disparities between property poor and property wealthy school districts’ access to resources across the state.
The cap also does not take into account the growing special education costs that blow budgets of school districts when one or two new students move into the districts, he said.
And Luneau said it ignores what happened in the Kearsarge Regional School District in January when a record number of voters turned out at the deliberative session to vote down a proposed budget cap by an overwhelming margin as they have in most other school districts where they have been proposed, including Epsom, where McGuire’s constituents rejected the budget cap by a large margin.
People support their public schools, Luneau said, and called the cap very shortsighted and very unfair until the state first acts to fix the education funding system.
“Every school district should be on an equal playing field,” he said, before passing something like this.
Rep. Peter Mehegan, R-Pembroke, called it an extreme measure but said there is “an absolute crisis with uncontrolled special education” costs creating a fiscal war.
“We’ve reached the point where we can’t go on like this,” Mehegan said. “Taxpayers in my town, we have had enough.”
Damon agreed it is an extreme measure that will have profound consequences for students.
With a cap, when the cost of special education services increases, the school is obligated to pay those costs, which will mean other students will bear the unfunded burden, she said.
“They will be penalized by this in a very severe way and that is not fair and equitable,” Damon said. “All students deserve a quality education and this will not facilitate that.”
The bill was approved on a party line, 10-8, vote.
Statewide Education Property Tax
The committee also approved House Bill 563 which would remove a provision added to the Statewide Education Property Tax statute in 2011 that allows communities that raise more money than they need under the tax to cover the cost of an adequate education to retain the money.
The bill would be effective July 1, 2025, but the first installment those communities would remit to the state would be March 15, 2027, under an amendment approved by the committee to allow for the current revenue system to adapt to the change as most school districts are voting on their budgets this month without accounting for the potential loss of the money.
The bill, if approved in a vote next week, would be reviewed by House Finance.
The change would align with the Superior Court decision in the Rand education funding lawsuit that the current method of administering the tax is unconstitutional because it has varying rates which conflict with the state’s proportional and reasonable provision for taxation.
The ruling by Superior Court Judge David Ruoff was appealed to the state Supreme Court and oral arguments have been heard, but a decision has yet to be issued.
Special Education Aid
House Bill 563 would increase state special education aid to school districts by about $28 million in the second year of the biennium, while the upcoming fiscal 2026 allocation would remain where it is today.
The $28 million would come from property wealthy towns and cities under the change to the Statewide Education Property Tax system.
The bill would boost both the basic per pupil aid by 2 percent in the second year of the biennium and would also increase differentiated aid for lower income, special education and English language learning students in the second year as well.
Also committee members agreed to re-instate the fiscal capacity disparity aid formula, which was eliminated last year in the changes in education funding distribution and appropriates $13.4 million for that program.
The disparity aid would help the 40 school districts on the bottom of the equalized valuation scale with additional state aid.
Overall about 200 of the 245 cities and towns would see an increase in state aid while 45 would lose money, including Manchester, which would lose about $10 million.
Rep. Sallie Fellows, D-Holderness, wanted to know which communities were helped and how much money was going into the disparity aid.
She said she likes to look at the per-pupil spending to see how communities compare but that information is not on the spreadsheet distributed with the proposed change.
Luneau said there were things he believed that needed to be addressed, but the bill recognizes the increased special education costs school districts have had to address through local property taxes without increases in state aid.
“This moves things in the right direction,” he said. “Raising the (per-pupil) grant $1,000 is very significant,” as is returning to disparity aid.
Ladd said the proposal recognizes the difficult revenue situation next fiscal year the state faces and makes significant changes that should help many communities in the second year of the biennium.
The bill was approved on an 18-0 vote of the committee and if it passes next week, it will go to House Finance for review.
House Bill 773
The committee also voted 18-0 which would remove a section of the special education catastrophic aid law that allows the state to prorate what it owes school districts if not enough money is appropriated to cover school districts costs if they are three-and-a-half times the average per pupil special education cost for the state.
In its place would be an 80 percent floor for what the state would be required to pay school districts. Currently the state pays about 68 percent of the cost.
If there is not enough money in the Education Trust Fund to pay the 80 percent obligation, general fund money would automatically be drawn to make up the difference.
Garry Rayno may be reached at garry.rayno@yahoo.com.