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NHSBA Comments on Proposed State Budget: HB 1 & HB 2

Budget Observations offered by New Hampshire School Boards Association March 17, 2009

The New Hampshire School Boards Association appreciates this opportunity to share our comments concerning specific portions of the state budget that have a direct impact on local school districts.

Full Text:
State direct financial aid represents a significant part of local education budgets. Of the almost $900 million in current adequate education aid, over $527 million is in direct grants to districts. Last November school districts were notified of fiscal year 2010 amounts in adequacy, and we are pleased to see the budget reflect the total increase in support of over $940 million, of which $577.6 million is in direct grants to districts.

However, we remain concerned with budgeted levels in other categorical aid programs that support local education budgets and were part of the budget process that commenced early last fall.

Building aid is currently prorated at approximately 95% of entitlements, with a current year allocation of $44 million. The proposed budget calls for a little less than $84 million, and is anticipated to be prorated based on predicted entitlements of local districts. Catastrophic special education aid is currently prorated at approximately 90% of eligible reimbursements, funded at $34.3 million. The budget calls for allocations of $32 and $33 million, 7% less than the current underfunded level. Anticipated needs in this area have been projected at over $40 million, representing costs for which local communities anticipate reimbursement. Tuition and transportation aid, currently funded at $8 million, is budgeted for a 9% cut at $7.3 million. Along with level funded dropout prevention money, this area of the budget was expected to increase to accommodate new costs associated with the new compulsory attendance age 18 law. Original estimates for funding new programs in this area called for increases of $2.5 million annually. While the pace of new programs may be slower than originally anticipated, the reality of new expenditures still exists.

These budget shortfalls come with a proposed reduction in the state’s share of retirement costs. The 5% decrease in the state share of teacher retirement contributions would have resulted in a loss in local school revenues of over $4.4 million when applied to fiscal year 2008 data. Using a reduced state share of the new employer contribution rates that become effective this July, and applying it to projected payroll increases, estimates over a $6 million unanticipated loss in state revenue next year. The overall reduction in categorical state aid programs, coupled with losses in state support for retirement contributions, represents significant losses to school district anticipated revenues that formed the basis for budget preparation and development that commenced last fall.

We all recognize the current economic situation and projected losses in state revenues. However, simply downshifting the state’s responsibilities to the local level does not address the problem; it simply creates new problems at the local level and unanticipated property tax increases. This is especially true in the first year of the biennium, with information on preliminary state budgeting first appearing in February, one short month before most of our state’s annual school district meetings. This has been a constant area of concern for local school boards, and has been addressed at NHSBA’s Delegate Assembly, our annual meeting of school board members from across the state. In 2006, NHSBA adopted a resolution stating that, “NHSBA opposes legislation that would directly or indirectly divert state costs or responsibilities to local districts,” in specific opposition to any downshifting of state costs to the local level. Also re-affirmed annually is a resolution that recognizes the distinct issues associated with budgeting over 16 months in advance of the fiscal year for which funds are appropriated. The resolution reads:

NHSBA opposes the dramatic and unpredictable changes in educational funding each year – often with solid information only coming to the school districts after the balloting or school district meetings are done. The NHSBA opposes any new educational funding legislation, passed and enacted by the legislature, which takes effect any earlier than the next biennium. School boards cannot be expected to work with legislation passed after the budget cycle for the following year is completed.

We thank you for your hard work on these difficult issues and hope you will restore the education funding that has been an integral part of local budgeting.
Click here for a printable copy of the Budget Observations

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