State aid for public education is projected to shrink by $89 million from fiscal year 2021 to fiscal year 2022, punching holes in school district budgets across the state, according to data from the Legislative Budget Assistant.
The expiration of one-time appropriations in the fiscal year 2020-21 budget for districts with relatively high proportions of students eligible for the free and reduced-price lunch (FRPL) program and with relatively low assessed property values per student accounts for the largest share of the decrease — $59.2 million.
A decline in applications for the free and reduced-price lunch program is projected to reduce state aid by another $19 million. In response to the pandemic, the U.S. Department of Agriculture, which administers the program, provided states with a waiver to offer a meal to all students, regardless of their eligibility. Despite an increase in the numbers who qualified for the program, school districts anticipate 10,000 fewer applications for the program. Since state aid is tied to the numbers receiving FRPL, it will also be reduced.
The state Department Education of projects enrollment to decline by about 4%, from 167,298 in 2020 to 160,191 in 2021, further reducing state aid by $13.9 million. With adjustments to other categories of state aid, the net reduction comes to $89 million.
Without legislation to offset the loss of state aid, the impact would be significant, especially in those municipalities with the smallest fiscal capacity and where increased property tax rates would be steepest.
The Concord-based New Hampshire School Funding Fairness Project has calculated that in 21 cities and towns a rate increase of $2 or more per $1,000 would be required to compensate for the foregone state aid.
In 18 of those municipalities, assessed property values per pupil are less than two-thirds the state average of $1.2 million, and in nine of them it is less than half that. In 14 municipalities, tax hikes of $2 to $3 per $1,000 would be required to match the loss of state aid, while three would need rate increases of between $3 and $4 and four of more than $4, according to the project’s analysis.
For example, Berlin, with property value of $465,323 per pupil — 38% of the state average — would need a $4.24 increase in the 2020 tax rate of $35.93, to offset a $2 million cut in state aid, which would add $848 to the tax bill for $200,000 home. Likewise, with $477,210 assessed value per pupil, Claremont stands to lose $2.9 million in aid, adding $3.90 to its $40.72 tax rate and $780 in taxes on a $200,000 property.
In the smaller towns of Troy, Northumberland and Lisbon assessed values per pupil range from 36% to 44% of average and tax rates would jump by $4.60, $4.51 and $4.35, increasing tax bills by $920, $901 and $869.
Meanwhile, in 30 municipalities tax rates would not need to rise at all, in 34 others they would rise by less than a dime and in 80 they would rise from between 10 and 50 cents. In 36 municipalities they would rise by between 50 cents and $1.
Bartlett, with 10 times the property value per pupil as nearby Berlin, could cover its shortfall by raising its tax rate by 2 cents. With seven times the property value per pupil of neighboring Newport, Sunapee could erase its deficit with a penny on the tax rate, while its town next door would need a boost of $2.82.
Several bills are being introduced to address the school funding issue. House Bill 623, sponsored by Rep. David Luneau, D-Hopkinton, would hold school districts harmless by prescribing that grants distributed in fiscal years 2022 and 2023 not be less than those of the prior year.
House Bill 608, filed by Rep. Steven Smith, R-Charlestown, would raise the cost of both the per-pupil grant and differential aid while restoring fiscal disparity aid based on assessed property value per pupil.
Other bills are expected to be introduced. — MICHAEL KITCH
