School Funding

When Keene residents head to the polls next week, they’ll consider a $69.2 million school district budget proposal, which is $3,476 higher than this year’s figure. That’s an uptick of just 0.005 percent.

But despite the marginal increase, if voters approve the budget, the city’s school-related property taxes would rise by 5.75 percent, or $212.70 on a house worth $200,000. The disparity, according to Tim Ruehr, chief financial officer for N.H. School Administrative Unit 29, stems from the expiration of a one-time increase in state educational funding that was part of New Hampshire’s biennial budget in 2019.

“Essentially, we were getting additional funding, and now that funding is going away,” Ruehr said. “… The problem is that that funding was needed, and it’s not like the state overpays for education. So, that’s the difficulty.”

At the same time, districts statewide are dealing with drops in enrollment due to the COVID-19 pandemic, as more families choose to homeschool their children or send them to private schools that offer more in-person learning. This also affects the amount of state funding districts receive, since New Hampshire provides baseline education aid tied to enrollment.

As part of the 2019 state budget compromise, districts for the current school year received additional state funding based on the number of students whose family income qualifies them for free and reduced meals, as well as local property values, according to the state education department.

“Essentially, towns that had less property wealth per student ended up getting more money,” Ruehr said. “And that made those towns happy, but now that’s gone.”

In the coming fiscal year, the Keene School District expects to receive $11.2 million in “adequacy aid,” the state’s baseline school funding that is distributed on a per-student basis. (For 2021-22, districts will receive a base of $3,786.66 per student, plus additional amounts tied to factors such as the number of low-income and special education students.) For Keene, that’s $2.2 million less than the $13.4 million the district received in adequacy aid for the current school year.

School districts in New Hampshire have to make up these sorts of revenue decreases by cutting their budgets and/or raising local property taxes. Keene is doing both this year, as the school board finance committee cut $1,339,876 from the budget originally requested by district administrators, and school-related property taxes are expected to go up.

Throughout the budget process leading up to next week’s school district balloting and meetings in many towns statewide, other local school districts have been dealing with the drop in state adequacy aid, too. The Monadnock Regional School District, for instance, expects to receive $9.9 million in state adequacy aid in the coming year, down $1.7 million from this year’s $11.6 million.

“We knew that this would be a difficult year” to prepare the budget, said Lisa Witte, superintendent of the Monadnock district, which covers Fitzwilliam, Gilsum, Richmond, Roxbury, Swanzey and Troy.

On top of the loss of one-time state funding, Witte said the Monadnock district also faces budget uncertainty because of a decline in enrollment due to the COVID-19 pandemic. That’s coupled with a drop in the number of families signing up for free and reduced lunch programs due to federal waivers that have expanded student access to meals during the pandemic and temporarily eliminated the requirement for families to register for these programs. The state and federal governments use the number of students enrolled in those programs to help determine which school districts receive additional funding.

“And that impacts the adequacy [aid] even further,” Witte said. “So, it’s kind of that compound effect.”

The N.H. Legislature is considering several bills to help address this issue, including one sponsored by District 10 State Sen. Jay Kahn, D-Keene, that would allow districts to use last year’s pre-pandemic enrollment numbers to determine adequacy aid for the coming year. But with bills like that still pending, Witte said districts could not factor them into their 2021-22 budget proposals, which are based on state adequacy aid projections released in November.

“If they do pass legislation that allows districts to use the previous year’s numbers, then obviously we would see those adequacy amounts rise again,” Witte said. “... I’m very optimistic that the projections for adequacy [aid] that were issued in November will probably shift. It seems likely, but again, you can never predict what’s going to happen legislatively.”

The ConVal School District — which covers Antrim, Bennington, Dublin, Francestown, Greenfield, Hancock, Peterborough, Sharon and Temple — saw roughly 6 percent of its students withdraw from the district due to the pandemic, Superintendent Kimberly Rizzo Saunders said. But the district also had its largest ever kindergarten enrollment, she added, so ConVal’s total enrollment dropped to 2,047 students, only 27 fewer than the year before.

That limited the enrollment-related drop in anticipated state adequacy aid, Rizzo Saunders said, but ConVal still expects to receive $336,882, or 4.2 percent, less in the coming year due to the expiration of the state’s one-time increase in education aid.

“So, the district has lost $336,000 in revenue, but ... our costs have not been able to be decreased in a way to make up for that,” she said. “Since most of our costs are in salary and benefits, when you lose 27 students you will have some small savings in supplies and technology, in subscriptions and things like that, but you’re not going to be able to cut a teacher or a specialist or an administrator based on 27 students across 11 buildings.”

Districts could have used the money from the temporary increase in state adequacy aid for one-time infrastructure projects, Ruehr said. But Keene opted instead to use the funds for operational expenses to limit property tax increases, which the district hasn’t seen over the past three years, he added.

“If you use those funds to run your schools, and don’t use them for one-time expenses, when those go away, you’ve got to raise it in taxes,” Ruehr said. “And that’s where we are, essentially.”

Overall, though, he said this loss of one-time adequacy aid points to larger issues with the state’s school funding formula, which is the subject of a lawsuit still pending before the N.H. Supreme Court brought by the ConVal, Monadnock, Winchester and Mascenic districts.

“It’s more complicated than the state cutting aid, because this was the state giving additional aid, and they said it was only for two years,” he said. “The problem is that aid’s really needed, and we really needed it to be a permanent change in the formula. For districts like Keene, that’s important.”

Jack Rooney can be reached at 352-1234, extension 1404, or Follow him on Twitter @RooneyReports.