Committee Summary for House Finance Division II (02/03/2025)

Bill/Time	Type	Title	Sponsor
Unclear 00:04:23.960 - 12:02:44 PM	General Working Session	Unclear

Unclear: Mark Mello, Department of Education Bureau of School Finance Information Only00:04:23.960 - 12:02:44 PM; Mark Mello from the Department of Education Bureau of School Finance provided an overview of education funding, focusing on adequacy. He referenced documents provided on January 13th, including an orientation package and a highlighted spreadsheet of selected communities. Mello discussed the formula for calculating adequacy aid for three towns: Albany, Allenstown, and Alton. He explained the concept of average daily membership in residents (ADMR) and how it affects the funding formula. Mello detailed the base adequacy aid, differential aid for students eligible for free and reduced-price meals (F&R), special education, English language learners, and home education. He also discussed the Statewide Education Property Tax (SWEPT) and how it contributes to the funding, including the concept of excess SWEPT, where communities like Alton collect more than needed for adequate education. Mello highlighted ongoing litigation regarding excess SWEPT and its potential implications on state policy.
Unclear: Representative Happ Information Only00:24:21.799 - 12:22:42 PM; Representative Happ asked for clarification on the origin of the $363 million value used for SWEPT across the state. Mello responded by explaining that SWEPT was enacted in the late 1990s with a frozen rate, which was later changed to a frozen dollar amount, leading to a decreasing rate as property values grew.
Unclear: Representative Wer Information Only00:25:22.600 - 12:23:43 PM; Representative Wer suggested that if the state collects excess SWEPT, it could be offset by credits against other state aid distributions like the Highway Block Grant and Meals and Rooms Tax. He argued this approach would balance the financial impact across towns and reduce legal challenges.
Unclear: Representative Murray Information Only00:30:43.080 - 12:29:04 PM; Representative Murray sought clarification on whether SWEPT funds must be used for educational purposes, expressing concern about potential negative local tax rates and ongoing litigation related to this issue.
Unclear: Representative Papovich Information Only00:31:44.039 - 12:30:05 PM; Representative Papovich raised concerns about potential cash flow issues for towns if excess SWEPT is remitted to the state, suggesting that this could necessitate short-term loans for towns to manage their finances. He also discussed the potential for increased efficiency in government by reducing the movement of cash between state and local entities.
Unclear: Representative Kelly Information Only00:38:38.800 - 12:36:59 PM; Representative Kelly inquired about how the SWEPT formula affects multi-town cooperative school districts, using the example of Kearsarge Regional School District. Mello explained that in a cooperative district, the budget and revenues are shared among the towns, but adequacy and SWEPT grants are credited to each town individually based on their formula, not shared among the cooperative's members.
Unclear: Representative Papovich Information Only00:37:39.040 - 12:36:00 PM; Representative Papovich emphasized the zero-sum nature of state-level financial decisions regarding SWEPT, pointing out that while some towns suffer financial harm, others benefit. He highlighted the need to balance state policy considering both the harmed and benefited communities.
Unclear: Representative H Phelps Information Only00:49:29.559 - 12:47:50 PM; Representative H Phelps inquired about the duration of the hold harmless grants. The response clarified that the hold harmless grants, set for fiscal year 25, will be frozen at approximately $59 million. The grants are scheduled to reduce by 20% every two years, starting in fiscal year 26, and will be phased out completely after a 10-year period. The state has been informing communities about the impending reduction to help them prepare.
Unclear: Mark Information Only00:50:27.160 - 12:48:48 PM; Mark provided detailed information on the hold harmless grants, explaining that they are calculated based on the fiscal year 25 adequacy payment and will reduce by 20% every two years until they are phased out in 10 years. He also discussed the process of calculating the adequacy grant, which includes base cost of education, subtracting the statewide education property tax (SWEPT), adding extraordinary needs grants, and the hold harmless grant if applicable. The final adequacy grant amount is state cash provided to schools.
Unclear: Mark Information Only00:51:27.640 - 12:49:48 PM; Mark continued to explain the education funding system, highlighting that the adequacy and SWEPT combined total state cash is around $1.8 billion. He mentioned upcoming discussions on school finance and adequacy and provided an overview of the packet's content, including forecasts for fiscal years 25, 26, and 27, and the various programs funded by the education trust fund.
Unclear: Mark Information Only00:52:18.799 - 12:50:39 PM; Mark discussed the education trust fund estimates and the upcoming budget from the governor. He highlighted the major programs funded by the trust fund, including district adequacy, charter schools, and other educational programs. He also explained the mechanics of SWEPT, noting it as a journal entry that does not involve actual cash transfer but is recorded as revenue and expenditure.
Unclear: Mark Information Only00:53:18.720 - 12:51:39 PM; Mark provided details on the education trust fund revenue, including the business profits tax and the statewide education property tax. He explained how SWEPT functions as a journal entry in state financials, impacting fiscal notes. He also addressed common misconceptions about lottery funding for schools, noting it contributes significantly but not fully to the education trust fund.
Unclear: Mark Information Only00:54:22.960 - 12:52:43 PM; Mark discussed the education trust fund surplus statement and its role in providing a big-picture view of the fund's revenues and expenditures. He noted that the committee has control over funding levels for various programs and emphasized the importance of understanding the surplus statement for future budgetary decisions.
Unclear: Mark Information Only00:55:25.559 - 12:53:46 PM; Mark continued explaining the education trust fund's historical and current allocations, including the expansion of programs funded by the trust fund. He highlighted the importance of the surplus statement in the committee's decision-making process and mentioned the upcoming revenue estimates from the House Ways and Means.
Unclear: Mark Information Only00:56:17.359 - 12:54:38 PM; Mark discussed the adequacy history document, noting changes in the adequacy formula over the years. He mentioned that districts are currently working on their 2026 budgets and the potential impacts of changing the adequacy formula. He advised considering the timing of changes to allow districts time to adapt.
Unclear: Representative Wer Information Only00:57:11.799 - 12:55:32 PM; Representative Wer expressed concerns about the Senate's decision to allocate funds to adequacy, which resulted in a significant surplus in the education trust fund that could not be used elsewhere. He emphasized the need to avoid such situations in the future.
Unclear: Mark Information Only00:58:05.079 - 12:56:26 PM; Mark provided details on school district expenditures, comparing fiscal years 2020 and 2024. He noted the impact of federal funding on expenditures and mentioned the exclusion of New Founders due to lack of financial reporting. He also discussed cost per pupil and equalized valuation per pupil, important metrics in school finance.
Unclear: Mark Information Only00:59:09.799 - 12:57:30 PM; Mark discussed the concept of equalized tax rates, explaining how they provide a more accurate comparison of tax rates between towns by controlling for assessing practices. He highlighted the importance of understanding these rates for fair comparisons.
Unclear: Mark Information Only01:00:22.319 - 12:58:43 PM; Mark presented enrollment data, explaining the changes in reporting requirements for home-educated students and the challenges in tracking these numbers accurately. He also discussed the compulsory attendance law, which requires students to be in an educational system once they turn six.
Unclear: Mark Information Only01:01:19.680 - 12:59:40 PM; Mark provided an overview of federal funding allocations to education in New Hampshire, detailing the various programs such as Title I, Title IIA, and special education grants. He explained the flow of funds from the US Department of Education to the state and then to local districts.
Unclear: Representative Murray Information Only01:02:18.599 - 1:00:39 PM; Representative Murray sought clarification on how towns in cooperative districts are treated in the funding packet. The response explained that towns can be part of cooperative districts or standalone districts and that different structures exist for school funding.
Unclear: Mark Information Only01:03:30.760 - 1:01:51 PM; Mark discussed the federal funding programs in detail, including their purposes and how they are administered. He noted that most of these funds flow through the Department of Education, except for some grants like the Rural School Achievement Program. He also mentioned the need for legislative action to clarify education laws.
Unclear: Representative D Roy Information Only01:04:32.880 - 1:02:53 PM; Representative D Roy asked about the process for schools to apply for federal grants directly. The response explained that while some grants can be applied for directly, most flow through the Department of Education as required by law.
Unclear: Brian Eaton Information Only01:25:13.880 - 1:23:34 PM; Brian Eaton provided an overview of charter school funding, explaining that it follows a similar formula to district adequacy but includes an additional grant. He detailed the payment schedule and the differences in special education funding, which goes to the district of responsibility.
Unclear: Representative Dy Information Only01:34:47.080 - 1:33:08 PM; Representative Dy inquired about specialized schools like the Monarch School of New England. The response clarified that these schools are non-public and receive funding through district agreements for special education students.
Unclear: Representative Murray Information Only01:35:41.760 - 1:34:02 PM; Representative Murray asked for a breakdown of charter schools by grade levels. The response indicated that this information was not available at the time but could be provided later.
Unclear: Brian Eaton Information Only01:36:33.400 - 1:34:54 PM; Brian Eaton explained how fiscal year estimates for charter schools are derived, considering enrollment trends and new schools. He also mentioned a $46 million grant for new and expanding charter schools, noting it's in its final stages.
Unclear: Representative Papich Information Only01:38:09.199 - 1:36:30 PM; Representative Papich asked about the duration of English as a Second Language (ESL) programs and the data collected on ESL students. The response indicated that the Department of Education collects data on ESL students but does not track the number of years a student spends in the program.
Unclear: Mark Information Only01:41:42.599 - 1:40:03 PM; Mark provided an overview of Education Freedom Accounts (EFAs), explaining how they allow parents to use funds for educational expenses outside of traditional public or charter schools. He detailed the funding formula, which is similar to other education programs, and the role of the scholarship organization in administering the funds.
Unclear: Representative Wer Information Only01:50:19.159 - 1:48:40 PM; Representative Wer asked if there are examples of EFA students moving between public schools and how funding is managed in such cases. The response confirmed that this happens infrequently and that the receiving district can charge tuition, which may exceed the EFA amount.
Unclear: Representative Kelly Information Only01:51:25.040 - 1:49:46 PM; Representative Kelly asked about the mechanics of EFA accounts, including how funds are managed and rolled over. The response clarified that the scholarship organization manages the funds and that any remaining funds at the end of a student's education return to the state.
Unclear: Representative Papovich Information Only01:55:39.480 - 1:54:00 PM; Representative Papovich confirmed that EFA funds are to be used solely for the education of the student for whom the account is established. He also inquired about the return of unused funds at the end of a student's education, noting the reconciliation process.
Unclear: Representative Murray Information Only01:57:40.079 - 1:56:01 PM; Representative Murray asked about the accountability of the scholarship organization managing EFAs. The response outlined the various entities to which the organization is accountable, including the Department of Education, Department of Revenue, and legislative oversight committee.