Proposed funding package would give a $100 million boost in state funding to state’s highest-need districts

House Bill (HB) 529 would restore two state funding sources for high-poverty school districts and school districts with low tax capacity in New Hampshire. 

Key takeaways: 

• Together, the package would provide $100 million in state funding for New Hampshire school districts, according to Reaching Higher NH estimates. 
• Our analysis shows that 86% of New Hampshire’s communities would receive funding if this package were to pass. 
• Communities that would receive the most funding include Manchester, Derry, Nashua, Rochester, Laconia, and Claremont. 
• The package would be funded through the Education Trust Fund, so no town would see a property tax increase as a result of this bill. 

The proposal comes as the state begins a new budget cycle with a projected $430 million state surplus, according to budget experts. 

HB 529 is currently in the House Education Committee, and is expected to be voted on by the full House by mid-February. If passed, schools would receive the funding during the 2023-2024 school year. 

About the Funding Package

HB 529 would provide approximately $100 million in state funding for New Hampshire’s highest-need schools through two funding sources: Fiscal Capacity Disparity Aid (FCDA) and Enhanced Free and Reduced Price Lunch (EFRL). Both funding sources were established in previous years, but were eliminated in 2022. 

The first, FCDA, would alleviate some of the inequities that exist in the school funding formula because of the state’s reliance on local property taxes to fund education. Currently, cities and towns with lower tax capacity must have higher tax rates than property-wealthy towns to raise the same amount of funds for their schools. FCDA would restore a funding source to those cities and towns, totaling approximately $81 million, so that they can offer a robust, high-quality education for their students. 

EFRL would restore a funding source for schools in high-poverty areas, totaling about $17 million per year. Increasing funding for these schools is a proven strategy to improve student outcomes, especially among students from low-income families, and leads to better long-term outcomes for them. 

According to Representative Dave Luneau (D-Hopkinton), it’s not a comprehensive fix to New Hampshire’s inequitable school funding system, but it helps close the gap. 

“I think at the end of the day, if there’s going to be an interest in having $100 million put towards cutting taxes, that it should be done in an equitable manner” rather than a flat-funded manner, Luneau told the NH Bulletin. Luneau was referring to the $100 million property tax cut that was part of Governor Sununu’s 2022-2023 statewide budget, which helped wealthy districts while cutting funding for high-need ones. 

Fiscal Capacity Disparity Aid (FCDA)

The bill would restore Fiscal Capacity Disparity Aid (FCDA) and would provide funding based on the tax capacity of communities:

• Communities with less than $600,000 in EVPP: $2,000 per student
• Communities with less than $1.6 million, but more than $600,000 in EVPP: between $0 and $2,000 per student, on a sliding scale
• Communities with more than $1.6 million in EVPP: no funding

*EVPP is the “equalized valuation per pupil,” and measures the town’s tax capacity per student by dividing the total taxable property in a community by the number of students who reside there. 

Under the current calculation, towns would receive FCDA if their tax capacity is less than the statewide average in 2022, which was was $1.6 million per student.

Enhanced Free and Reduced Price Lunch (EFRL)

The bill would also restore a funding source based on the concentration of students who are eligible for school meals, which the state uses to measure poverty:

• Communities with less than 48% of students participating in school meal program: $700 per student
• Communities with between 12% and 48% of students participating in school meal program: $0 to $700 per student, on a sliding scale
• Communities with less than 12% of students participating in school meal program: no funding

Town-by-Town Analysis Methodology 

The town-by-town analysis uses the FY2024 District Public School Adequacy spreadsheet to calculate the estimated financial impact on municipalities across the state as a result of HB 529. It does not include charter schools or unincorporated places. 

The Tax Rate calculations used the 2022 tax rates from the New Hampshire Department of Revenue Administration to model potential tax impacts in FY2024. 

These are estimates and are for discussion purposes only, since official numbers for property valuations, average daily membership (ADM), and official tax rates for FY2024 have not yet been published. 

Data Sources:

Adequate Education Grants, Equalized Valuation, ADM-R: NH Department of Education District Public School Adequacy, SFY2024