New Hampshire's School Building Aid program, which has been subject to dissection and discussion for several years, may finally be getting a makeover. But whether the latest proposal for reform goes far enough to address the program's fundamental problems is uncertain.
Because of those past obligations, the state is committed to spending nearly $540 over the next 30 years, even if no new projects are approved for state support. That looming financial obligation has spurred lawmakers to consider ideas for reform to the School Building Aid program in recent years. Two proposals before the House this week represent the most comprehensive program of reform in years. Those proposals would:
- subject the School Building Aid program to a $50 million annual cap;
- continue the moratorium on state aid for new construction through mid-2013;
- require the Department of Education to come up with a way to prioritize and rank building projects based on factors like safety, overcrowding, and outmoded facilities.
The Center published a review of the School Building Aid program earlier this year (available here) and suggested several options for reform, some of which are included in the proposals up for a vote this week. Many of these reforms are already part of building aid programs in other states.
But the latest proposals in New Hampshire do not include one idea raised by the Center’s work: rewriting the current formula used by state administrators to decide how much aid school districts get to help pay for their building projects. Currently, districts get between 30 percent and 60 percent of their principal costs covered by state aid. That reimbursement rate varies depending on several factors: a district’s property values, median income, and whether a school is part of a cooperative school district, among others.
But recent growth in the school construction costs has been driven in part by the construction of new high schools by towns who pull out of multi-town districts. Four towns –- Bedford, Windham, Bow and Litchfield –- have undertaken new high school construction totaling more than $130 million in recent years, 30 percent of which was paid for by the state. Should a new School Building Aid program still offer that level of state reimbursement for towns that decide to build their own high schools?
There are also concerns among some officials that the current formula for state reimbursement does not go far enough to incentivize poor districts to make needed repairs to their school facilities. Would a higher state reimbursement accomplish that goal?
New Hampshire could also follow the example of other states that dedicate a specific revenue source to pay for new school construction. New Hampshire now pays for that aid out of the General Fund, making it more likely to be subject to annual budgetary pressures.
The question of larger reform aside, what do the current proposals for fixing School Building Aid mean for school districts now? The Legislature budgeted $49 million for School Building Aid in 2012 and $47 million in 2013. But because of the moratorium on aid for new construction, that money is only going to pay off existing obligations for old construction. That annual obligation will decrease every year, as old bonds are paid off, falling below $40 million by 2017. But with a $50 million annual cap on state aid, that leaves relatively little money for new construction. And if you assume that the ongoing moratorium has resulted in a backlog of building proposals, a $50 million cap won’t go very far to meet district demand – at least not until the existing obligation trails off considerably.