The House Municipal and County Government Committee recommended adding HB 1393, the bill that would have allowed school district voters to impose a school district spending cap in their districts, to an unrelated Senate bill at their meeting on Thursday, April 27. The full House is scheduled to vote on the bill and its amendment on Wednesday, May 4.
The amendment to SB 400 would revive the school budget cap bill after the Senate killed it in late April over a multitude of concerns that it would negatively impact public schools. It also includes two other unrelated bills that the Senate killed or referred for interim study. SB 400, as originally proposed and passed by the Senate, relates to affordable housing and zoning policies.
Under HB 1393, school district voters would be able to adopt an annual school district budget cap equal to a set per-student amount multiplied by the number of students in the district. The per-student amount could be adjusted annually based on a percentage set by voters or using a federal inflation index.
“I have discussed this and heard from a lot of my superintendents. I think it’s a huge issue,” Senator Ruth Ward (R-Stoddard) said when she proposed the motion to kill the bill in a Senate committee in April. “We need to look at it much more closely and talk to the school administrators and listen to them.”
Public testimony: HB 1393 doesn’t address the underlying concern of rising property taxes
During the public hearing in the Senate on April 11, 937 people opposed the bill — about 93% of the public testimony. Most of the in-person testimony centered around concerns that capping school district budgets would undermine public schools without addressing the underlying issue of inequitable school funding.
“This is a misguided solution to a real problem,” said Mary Wilke, a Concord resident. “The problem is that we fund our schools largely via property taxes, leading to divisions between taxpayers.”
“Year after year, the state has underfunded our schools,” she said, pointing to the state’s reliance on property taxes to fund over 70% of the cost of public education.
Scott Gross, a business administrator in the Goffstown School District, raised a number of technical concerns with the bill. According to Gross, local tax rates are driven by a number of factors outside of the actual school district budget: state, federal, and other revenues, and property valuation being critical factors, which aren’t addressed by HB 1393:
“In most communities, citizens are concerned not just with rising budgets, but with the impacts of those budgets on local tax rates. This bill doesn’t address the local tax rate. It simply tries to curb the local ability to manage their finances,” Gross told the Committee during the hearing.
“Tax rates are not just determined by the local proportionate share, but most importantly by state and federal revenues and the town’s evaluation of their property.”
He also said that HB 1393 could inhibit school districts’ ability to accept federal and state grants, since they would fall outside of the previously-approved budget cap.
New Hampshire has awarded a number of short-term grants in the past 10 years, including $30 million in school safety grants following a tragic school shooting in Florida in 2018 and, more recently, $60 million in one-time, targeted funds in 2020. HB 1393, according to school finance experts, may undercut the ability of school districts to accept and expend the funds.
Croydon as a case study
Croydon, a small town in New Hampshire, is currently trying to figure out how to operate under a $10,000 per student budget, which was passed at their recent town meeting. School board members have proposed meeting the budget limitations by offering microschools as the default public schooling option, and requiring them to pay the difference in tuition if they choose to attend a nearby public school.
Community members have rallied against the decision, noting that microschools like Prenda and Kai Pods do not have certified teachers, are managed by a for-profit, out-of-state company, and are no substitute for an in-person public school.
The budget vote has been a warning of what could happen if other school districts adopt the types of budget caps allowed under HB 1393.
Ed Spiker, a parent in Croydon, testified to the House committee that school budget limitations like those in HB 1393 would take away opportunities for students.
“Everything my sons have been able to achieve would be nearly impossible under HB 1393. Please think of the negative repercussions this bill will create for families who already have been attending schools and hope to continue,” Spiker told the Committee at the public hearing in April.
Reviving bill that heightens bar for budget cap overrides
The House Municipal and County Government Committee also amended SB 329, another housing affordability bill, to include HB 1194, which would increase the threshold for a municipal or school district tax cap from a simple majority to a ⅗ supermajority. Like HB 1393, HB 1194 was killed by the Senate in April, and the amendment is an effort by the House to revive it.
Under current law, towns and districts that have tax caps may override the caps with a simple majority vote (over 50%). HB 1194 would change the threshold to a vote of 60% approval.
SB 400 and its amendment will head to the House floor for a vote on Wednesday, May 4. The full House will have to vote on adopting the amendment and then will vote on the full bill.
If passed, the bill will head back to the Senate. The Senate can choose to adopt the House’s version as amended, or enter a “committee of conference,” where appointed members of each chamber will work together to iron out a compromise.