OLR Bill Analysis

sHB 7019 (as amended by House "A")*

AN ACT CONCERNING THE MINIMUM BUDGET REQUIREMENT.

SUMMARY:

This bill extends, for fiscal years 2016 and 2017, the minimum budget requirement (MBR) for local education spending and provides towns a greater ability to lower their MBR. Under current law, the MBR prohibits a town from budgeting less for education than it did in the previous year unless, and with limits, the town can demonstrate a (1) decrease in school enrollment or (2) savings through increased efficiencies. If a town receives an increase in state education cost sharing aid, its MBR will increase over the previous year by the amount of the aid increase.

The bill affords towns greater ability to lower their MBR by (1) increasing the per-student reduction allowed for decreased enrollment, (2) raising the overall cap on how much a town can reduce its MBR, and (3) removing the limit on how many ways a town can qualify for MBR flexibility. For reductions based on declining enrollment, the bill creates a two-tiered mechanism that depends upon the percentage of students eligible for free and reduced price lunch (FRPL) under the federal school lunch law.

The bill completely repeals the MBR for school districts that have district performance index (DPI) scores (see BACKGROUND) in the top 10% of all districts in the state. Thus, there are no restrictions on these districts' ability to reduce their education budget.

The bill prohibits the alliance districts from reducing their MBR. Alliance districts are the 30 school districts with the lowest DPI in the state.

It also repeals obsolete language regarding the MBR and the minimum expenditure requirement (the precursor to the MBR) and makes a number of technical and conforming changes.

*House Amendment “A” creates a two-tiered MBR reduction mechanism and deletes numerous obsolete provisions of the MBR and the minimum expenditure requirement.

EFFECTIVE DATE: July 1, 2015

CHANGES TO MBR REDUCTION

Under current law, towns can ask the State Department of Education (SDE) for a MBR reduction under only one of the ways the law provides. This means a town cannot seek a reduction for a decrease in enrollment and another decrease for increased efficiencies. The bill removes the limit, thus allowing towns to use more than one MBR reduction mechanism.

The bill establishes a two-tiered MBR relief mechanism for reductions due to decreases in school enrollment. Under this device, districts with (1) 20% or more of their students qualifying for FRPL can reduce their MBR by up to 1.5% and (2) less than 20% of students eligible for FRPL can reduce their MBR by up to 3%.

Furthermore, under the bill, towns in either group can receive an MBR reduction over the stated maximum percentages if (1) the education commissioner approves, following a review of the proposed reduction, and (2) the town's board of education approves of the reduction by a vote held at a duly called meeting.

Table 1 shows highlights of these changes.

Table 1: MBR Reductions for Decreased Enrollment and Highest DPI Scores Under Current Law and the Bill

Provision

Current Law

FYs 14 & 15

Under the Bill

FYs 16 & 17

Dollar reduction per student

$3,000

50% of the net current expenditure per student (NCEP)*

Maximum MBR reduction

0.5% of the MBR

Tier I

1.5% of the MBR for districts with 20% or more of student population qualifying for FRPL

Tier II

3.0% of the MBR for districts with less than 20% of student population qualifying for FRPL

Possible Additional Reductions

Districts in either of the above groups can receive greater MBR reductions if a proposed reduction is approved by education commissioner and the local board of education.

Districts in the top 10% of the state, based on DPI

Subject to MBR

Exempt from MBR

*For all school districts 50% of the NCEP per student is expected to be greater than $3,000, the flat number under current law. The 2013-14 statewide average NCEP is $15,729.

By law and unchanged by the bill, a school closing receives a dollar-for-dollar MBR reduction with no cap. Also unchanged under the bill is the dollar–for-dollar reduction for school districts without high schools that pay tuition to other districts to educate their high school age students. The MBR flexibility for these students when enrollment drops is a dollar-for-dollar reduction equal to the reduction in tuition paid.

The bill also maintains the existing MBR reduction allowed for efficiencies and regional collaboration. A town can reduce its MBR to reflect half of any new and documented savings from (1) increased efficiencies within its school district, as long as the education commissioner approves the savings or (2) a regional collaboration or cooperative arrangement with one or more other districts. This MBR reduction provision has a hard cap of 1.5%.

Alliance Districts

The bill prohibits alliance districts from reducing their MBR. Under current law, the education commissioner could approve an MBR reduction for an alliance district if it could demonstrate that its local financial support for the education budget increased when compared to its local contribution used to determine the town's local funding percentage under state law.

DEFINITION OF NET CURRENT EXPENDITURES PER STUDENT

The bill defines net current expenditures per resident student as, in any school year, the net current expenditures, as defined in state law, for such school year divided by the number of resident students in the town for such school year. Resident students are the number of students living in the town that the school district has responsibility to educate (thus is does not cover students who graduate early or drop out of high school).

BACKGROUND

District Performance Index (DPI)

A school district's DPI is its students' weighted performance on the statewide mastery tests in reading, writing, and mathematics given in grades three through eight and 10 or 11, and science in grades five, eight, and 10 or 11.

COMMITTEE ACTION

Education Committee

Joint Favorable Substitute

Yea

33

Nay

0

(03/25/2015)