Five ways the Senate budget would affect school funding

By ETHAN DEWITT

New Hampshire Bulletin

Published: 05-31-2023 5:00 PM

New Hampshire came a step closer to passing a two-year budget Tuesday, after the Senate Finance Committee voted to advance its proposed budget. Along the way, the committee has made some major proposed changes to education funding.

The spending plan will go next to the full Senate for a vote and then to negotiations between the House and Senate in June. And decisions are far from final; with a narrowly divided Republican-led House that relied on Democrats earlier this year to pass its own budget, compromise efforts this year could be volatile.

But in the meantime, here are five things to know about the Senate’s changes to education funding:

A new school funding formula model

For years, pressure has mounted on lawmakers to update New Hampshire’s “adequacy formula,” the structure that determines how much the state pays each public school district.

On Friday, the Senate Finance Committee advanced its own proposal. The Senate’s plan would increase the base amount districts receive from the current $3,787 to $4,100 per student. It would also increase the amount that the state pays out for each student receiving a free and reduced-price lunch from $1,893 per student to $2,300 and make similar jumps for English-language-learning students and students receiving special education services.

Those increases are similar to what the House passed in its budget in April. Where the two chambers differ is over their approaches to targeted aid.

In order to attempt to balance funding between school districts with higher needs and lower needs, the House proposed a complex array of targeted funding programs, including “fiscal capacity disparity aid,” “extraordinary needs grants” and “stabilization grants.” Each program gives districts additional funding based on slightly different factors, awarding some districts based solely on their property tax revenues and others based on the number of their students from low-income families.

The Senate Budget Committee simplified those targeted programs, instead devoting most money into one key vehicle: extraordinary needs grants. That program assists school districts below a certain level of property valuation and pays out the aid on a per-pupil basis, based on the number of students who receive free and reduced-price lunch. The Senate’s proposal would significantly increase the per-pupil amount each qualifying district would receive and would include a “hold harmless” provision to maintain funding for any school district that might lose state funding under the new formula. The hold harmless funding would phase out after 10 years.

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Overall, the Senate’s proposed budget spends about $50 million more than the House had proposed for public education and about $100 million more than Gov. Chris Sununu’s proposed budget. But the Senate’s focus on per-pupil targeted aid — and not just property values — means that some school districts with low property values and declining enrollment, such as Berlin, will likely see less state aid over time, while districts with low property values but high enrollment, such as Manchester, will likely see higher amounts of state aid over time.

To review how much your school district would receive under the governor’s budget, the House-passed budget and the Senate Finance Committee proposed amendment, go to https://tinyurl.com/schoolfundingcompare.

Proposal to use Medicaid for free, reduced-price lunch shelved

Among the many school funding proposals this year, one has gathered bipartisan support: Medicaid direct certification.

The idea is to allow school districts to automatically enroll students in free or reduced-price lunch programs if their families are already enrolled in Medicaid, which has the same income limits. The proposal would take advantage of a federal program that would allow Medicaid data to be shared with the Department of Education. Anti-hunger advocates say it would help ease the paperwork burden for 6,000 to 7,000 students who could qualify for free or reduced-price lunches but whose families have not applied to do so. And public schools say it would give a more accurate accounting of who in the district qualifies for free or reduced-price lunches, which in turn could give them more targeted state and federal aid.

Sununu declined unilaterally to have the state join the program in 2022, arguing he needed legislative approval to do so. But this year, he said that he was open to doing so if lawmakers put the proposal in the budget and set aside funding for administrative costs. The House added the Medicaid direct certification program into its budget earlier this year.

On Friday, however, the Senate Finance Committee voted to remove the program from the budget and instead form a study committee to look at the budgetary effects of automatic enrollment. Republican senators argued that automatically increasing the number of students who are receiving free and reduced-price lunches could require the state to pay out more in adequacy funding.

In response to the move, New Hampshire Hunger Solutions, an advocacy group that has been pressing for the change, called on its supporters to push the Senate to change course. “No more study is needed!” the group wrote in an email Friday.

Funding for NH civics textbook, computer science plan restored

During his budget address to lawmakers in February, Sununu touted two initiatives within his proposed budget: the creation of a commission to design a New Hampshire civics textbook to teach about the history of the state’s government and a program to incentivize public school teachers to get trained to teach computer science classes by giving them one-time bonuses.

But the House made some cuts to those efforts when it passed its budget in April. House lawmakers kept the civics commission but removed the $2 million in proposed funding to help pay for the textbook design, and they dramatically reduced the computer science funding from $5 million to $500,000.

The Senate Finance Committee has voted to restore some of that funding. In an amendment Friday, the committee added $1 million back to fund the civics textbook and moved to restore $4 million for the computer science educator program.

Weyler’s proposal to limit Education Trust Fund rejected

In March, House Finance Committee Chairman Ken Weyler, a Kingston Republican, added to the budget sweeping changes to the structure of the Education Trust Fund, the account that provides all of New Hampshire’s state assistance to public schools and that spends just over a billion dollars a year.

Citing a recent surplus in the trust fund, Weyler argued the fund was receiving too much revenue and said that its uses should be limited to just paying for per-pupil aid to schools under the state’s adequacy formula. Other funding programs, such as building aid and special education aid, should be funded out of the state’s general fund, which pays for the bulk of state programs, Weyler argued.

But the proposed changes raised concerns from some education advocates, who said they could make it easier for lawmakers to divert money from those additional programs. Education Trust Fund dollars are “ring fenced” and can’t be easily re-appropriated; general fund dollars are not.

The budget approved by the Senate Finance Committee Tuesday would remove Weyler’s changes and maintain the requirement that the Education Trust Fund pay for school building aid, special education aid, charter school lease aid, tuition and transportation aid and other funding programs.

New funding for teacher recruitment

One new item in the Senate Finance Committee’s budget is a teacher recruitment grant program. The committee voted to adopt a program that would devote federal funds toward lowering the financial barriers to becoming a teacher.

The program would allow the Department of Education to provide grants to colleges and universities in the state to programs “designed to increase participation in the educator workforce.” Under the program, the department could also offer stipends to teaching candidates seeking to gain experience in schools as part of their course. The stipends could be up to $500 per week for a 16-week course.

The program, which was originally introduced as standalone legislation under Senate Bill 140, would direct the department to seek American Rescue Plan Act and Elementary and Secondary School Emergency Relief Fund funds left over from the congressional COVID-19 relief packages passed by Congress in 2021.