On Friday, May 29, the Senate Finance Committee finalized its version of the state budget for the 2022-2023 biennium. A new analysis by Reaching Higher NH indicates that the Senate’s proposed budget would result in a $24.7 million drop in state funding for public schools this coming fall, with losses concentrated in districts with lower property tax bases like Derry, Rochester, Claremont, and Milford.
The Senate also added in the highly controversial school voucher bill that is expected to cost school districts approximately $30.8 million in its first five years. Senate Bill (SB) 130, which was heavily opposed by Granite Staters, would allow public taxpayer dollars to pay for private and homeschooling expenses through “Education Freedom Accounts,” or vouchers.
The decision to cut funding and divert public funds from public schools through vouchers is happening as the state is anticipating a half a billion dollars more in tax revenue than originally anticipated in March. Experts have estimated that the Education Trust Fund, the state’s “bank” for public schools (including charter schools), will have a surplus of approximately $57 million at the end of 2022, which lawmakers have set aside for a property tax reduction that is expected to primarily benefit property-wealthy towns.
- The Senate Finance Committee proposal preserves funding for schools due to temporary changes in enrollment and school meal program participation;
- Despite a half a billion dollar jump in state revenues, the Senate version of the budget would result in a $24.7 million drop in state funding for public schools in the 2021-2022 school year due to the expiration of one of the two targeted aid programs; and,
- A “relief fund” would provide $17.5 million each year in additional aid to districts that have high proportions of students navigating poverty, including Manchester, Nashua, Rochester, and Concord.
About the school funding proposal
The Senate Finance Committee voted to adopt the provisions of Senate Bill (SB) 135, which would protect districts from funding cuts due to pandemic-related enrollment drops and declines in school meal program participation. Drops in school enrollment, which are concentrated in younger grades, are expected to rebound next school year.
It also institutes a $17.5 million “relief fund,” which would target funding to school districts with higher proportions of students navigating poverty. The formula uses a sliding scale to calculate funding based on the proportion of students navigating poverty (measured by participation in the Free and Reduced-Price Lunch program). Using only the formula, the fund would provide $20,168,984 to 192 school districts, but the fund is capped and prorated at $17.5 million per year.
Table 1 outlines the towns that are set to receive the most as part of the relief fund.
Schools currently receive approximately $16.7 million in a similar program, which was set to expire at the end of this month.
Fiscal Capacity Disparity Aid
The Senate’s proposal does not include an extension of the Fiscal Capacity Disparity Aid program, which currently targets approximately $60 million in state dollars to towns that have low property tax bases.
As a result, eight municipalities are expected to lose over $1 million in state funding, as shown in Table 2. (Note: The beige is the current year’s funding, the blue is the Senate proposal, and the green is what funding would be if the Senate extended the disparity aid). NOTE: These figures do not include the statewide education property tax (SWEPT) or stabilization grants.
Under the current proposal, Derry and Rochester would each lose approximately $2.8 million in state funding next school year, while Claremont would lose approximately $2.2 million.
Alternatively, if fiscal capacity disparity aid were extended, Derry’s state funding would increase approximately $535,670 compared to this school year, while Rochester would receive $679,747 more in state funding compared to this school year.
Table 2: Municipalities Expected to Lose $1M+ Between SY2021 and SY2022
Fiscal Capacity Disparity Aid, which was reinstituted in 2020 as a crucial lifeline for these communities, has allowed school districts to retain educators and staff, expand or preserve programming, and reduce tax rates. Some school districts expected the cut, as explained by Shaker Regional School District Superintendent Michael Tursi:
“It’s going to hit us really hard this year in trying to explain that our operating budget is minimal, but … if your expenditures are not being offset by your revenues, the local taxpayer has to pick up the difference. It’s going to be especially difficult this year in the sense that many families have fallen on hard times. They’re scraping. We understand that.”
Town-by-Town Analysis Methodology
The Senate Finance Committee budget proposal combines the provisions of SB 135 and the $17.5 million “relief fund” to restore approximately $60 million of the $89 million drop in state funding that is expected this fall.
The town-by-town analysis uses 2019-2020 and 2020-2021 Average Daily Membership in Residence (ADMR) to calculate the estimated financial impact on municipalities across the state as a result of SB 135. It does not include charter schools or unincorporated places.
The “relief fund” estimates were calculated using the ADMR set forth by SB 135. The current amendment states that the NH Department of Education must use Average Daily Membership in Attendance (ADMA) in order to calculate the relief fund amounts, but per-pupil adequate education grants are typically calculated using ADMR; as such, this analysis uses ADMR to calculate the amounts of the relief fund.
The Senate proposal requires the NH Department of Education to prorate the relief fund amounts to equal a total of $17.5 million per year of the biennium. Before prorating the amount, the relief fund would total $19.7 million; the figures in the analysis have been prorated to reflect the statutory language of the current bill.
The cells that are highlighted in yellow are towns that are not anticipated to receive additional funding from the Education Trust Fund because their statewide education property tax (SWEPT) exceeds the amount of their total cost of an adequate education.
Email Christina Pretorius, Policy Director, at firstname.lastname@example.org with any questions regarding this analysis.