Proposed budget amendment would bring more money for education to NH’s most vulnerable communities

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A proposed amendment to the Governor’s recommended state budget would increase school funding to the state’s most vulnerable communities for the next two years. The latest version, which was presented to the House Finance Committee on Tuesday, provides 154 communities with at least 5% more state funding over the current formula, and the most vulnerable communities are set to receive between 15% and 20% more state funding.

The amendmentrestores stabilization grants to 2016 levels in 2020, provides full base adequacy funding for full-day Kindergarten students, and introduces two new funding streams in 2021: Fiscal Capacity Disparity Aid, and additional Free and Reduced Lunch Aid.

Key findings include:

  • 154 communities will see at least a 5% increase in state dollars, relative to current law, over the next two years.
  • 34 communities will see a decrease in state dollars, relative to current law, over the next two years. For these communities, the average dollar loss is around $50,000.
    • These 34 communities are losing money because of how funding for full-day kindergarten is proposed to change under this proposal.
  • The additional funding is concentrated to the most property-poor towns and those with high concentrations of Free and Reduced Lunch-eligible students: except for Nelson, every top 20 community has property wealth per student less than $703,000 (25th percentile) and a Free and Reduced Lunch-eligible student population of at least 35% (median statewide figure is 26%)

The latest version of the amendment, 2019-1232h, was presented to the House Finance Committee at their executive session on Tuesday, April 2. The full House is required to vote on the proposed budget by Thursday, April 11.

Background

This session, the House Education Committee rewrote HB 709 to create two new funding streams for property-poor communities and communities with high concentrations of low-income students. The bill would have:

  1. In 2020: Restored stabilization to 2016 levels, before the annual cuts
  2. In 2021: Eliminated stabilization grants, instated Fiscal Capacity Disparity Aid (an additional funding stream that is dependent on the property wealth of a community) and additional Free and Reduced Lunch Aid (additional funding for communities with high concentrations of poverty). Districts currently receive $1,865 per student that qualifies for Free and Reduced Lunch in the form of differentiated aid, and this amendment provides additional FRL aid on top of that.

Read more about HB 709 here.

The Division II subcommittee also included HB 184 into the amendment, which would provide full base adequacy grants to districts that offer full-day Kindergarten. Currently, districts receive half of the per-student base adequacy grant ($3,636 in 2019), plus an additional $1,100 per full-day kindergarten student through the Kindergarten Aid Grants funded by the online lottery game Keno. Learn more about how kindergarten funding works here.

The House Finance Committee retained both bills and included them into Amendment 2019-1232h. The New Hampshire House will vote on the budget presented by House Finance next week.

Vulnerable communities receive more state funding

The proposal targets the most school funding to the communities with low property wealth per student and a high concentration of poverty, measured by the percentage of students eligible for the Free and Reduced Lunch program.

Winchester, which has among the highest concentration of poverty in the state, would receive about $1.6 million more in state funding. 390 of Winchester’s 551 K-12 students, or 71%, are eligible for Free and Reduced Lunch. The median statewide figure is 26%.

Franklin, which has a FRL eligible student population of 58%, would receive $2.5 million in additional funding.

The table below shows the 20 communities that will receive the most additional funding in terms of percent change, relative to the current law.

Communities that would receive the most additional funding (% change). Click to expand.

View the full analysis to see the effect on your community, here.

Effects on property tax rates

The House Education Committee’s initial proposal aimed to provide property tax relief to New Hampshire communities with the lowest capacity to raise revenues due to low property values or limited taxable lands (federal and state land, national parks, and other lands are not subject to local property taxes) and for communities with high concentrations of poverty, determined by their rates of students eligible for Free and Reduced Lunch.

According to our analysis, if the extra funding were to be used strictly for property tax relief, Berlin would receive $4.3 million in additional aid, resulting in a 27% reduction in property tax rates. Northumberland would receive $1.1 million in additional aid, resulting in a 26% reduction in property tax rates.

Lisbon, Newport, Greenville, Farmington, Pittsfield, Troy, and Charlestown would also receive at least 20% reductions in property tax rates if the additional funding was used entirely to reduce property tax rates (and school budgets stayed the same).

The table below shows the 20 communities that would receive the most property tax relief under the proposal:

Communities that would receive the most property tax relief. Click to expand.

View the full analysis to see the effect on your community’s property tax rate, here.

How we conducted our analysis

To put together our analysis as well as the various tables above, Reaching Higher NH used documentation from the following sources

Financial impacts of HB2 amendment 2019-1232h: Office of Legislative Budget Assistant

Free and Reduced Lunch-eligible student population, property wealth per student (“equalized value per pupil”): New Hampshire Department of Education (Free and Reduced Lunch: 2018; Property Wealth Per Student: 2017)

Assessed property tax rates, assessed property valuation: New Hampshire Department of Revenue Administration (2018)

“Changes to current law” include the state funding changes under current law. The formulas assume:

  • FY 2020 stabilization grant at 84% of 2016 levels (year four of the annual 4% cuts) under current law
  • FY 2021 stabilization grant at 80% of 2016 levels (year five of the annual 4% cuts) under current law

Because there is no change to the adequate education grant calculation in the proposed amendment, that figure remains constant in the calculation. All calculations assume student enrollment and eligibility for differentiated aid remain the same.  

Potential property tax rate reductions assume all spending, including school and municipal budgets, and property valuations remain the same.

For questions about this analysis or its findings, email Greg Bird, Senior Research Analyst, at greg@reachinghighernh.org.