Committee debates who keeps excess SWEP funds as several bills seek to reclassify or remit the money

Lawmakers spent the work session debating how the statewide education property tax — commonly called SWEP — should be treated in the school funding formula, with competing bills and court cases shaping conflicting options.

Representative Spilsbury framed one side of the argument, saying the committee is “moving towards the inevitable that we need to call for the excess to be remitted to the DRA,” and noting a version of the RAND litigation that would require remittance. Representative Fellowes, who sponsored a bill to reclassify SWEP amounts as a local contribution, described SWEP differently: “The state has no business declaring part of their property tax to be a state tax,” she said, arguing the amounts are local revenue and should remain with municipalities for education spending.

Why it matters: the treatment of SWEP changes how much actual state cash flows to districts and whether municipalities retain or remit excess collections. Committee discussion centered on roughly $363 million in SWEP allocations statewide and an estimated $28 million of “excess” in current years that some proposals would remit to the state — a transfer that could increase the number of towns classified as having excess SWEP.

Key details from the discussion

- Bills discussed. HB137 (Rep. Cordelli) would let municipalities keep SWEP “excess” and allow use for education-oriented purposes. Another proposal advanced by Representative Fellowes (referred to in committee as HB527) would reclassify the statewide adequacy education property tax line as a “local contribution,” effectively freezing the current SWEP allocation so it no longer reads as state revenue. Representative Spilsbury’s bill (discussed as a contrasting proposal) would remit excess SWEP back to the state, making that money available to the Education Trust Fund.

- Numbers discussed. Staff and members repeatedly referenced a $363,000,000 statewide SWEP allocation (the frozen benchmark used in recent law) and said the current estimate for excess swept towns is about $28,000,000; committee staff later ran a draft analysis indicating the number of excess-SWEP towns could rise from 43 to roughly 55 under some proposals.

- Legal context. Members repeatedly raised pending court matters — the Claremont litigation legacy, the RAND superior-court matter, and the ConVal litigation — as determinants of whether the state may treat SWEP as state revenue and whether municipalities may retain excess. Several members said the committee’s choices should be informed by those cases and by the Division of Revenue Administration (DRA) fiscal notes.

Quotes and explanation

- On remittance: Representative Spilsbury said, “I do think it’s a fundamental conversation for the committee... it’s moving towards the inevitable that we need to call for the excess to be remitted to the DRA.”

- On reclassification and transparency: Representative Fellowes said the bill would “label it local money,” arguing the reclassification would make state aid more transparent and preserve municipal taxing authority for local education needs.

- On mechanics: A staff member identified as Mark summarized the mechanics of Representative Fellowes’ draft, saying it “freezes swept for a moment in time” at the $363 million allocation and then treats each municipality’s allocation of that frozen amount as its local contribution when calculating state aid.

Discussion points and staff direction

Committee members pressed on practical effects: towns that have collected excess SWEP for years would either have to find replacement revenue or reduce spending if remittance were required; towns pay property taxes locally and use overlays to cover unpaid tax bills; and SWEP equalization is affected by assessment timing (the DRA equalization process lags and creates year-to-year differences). Members repeatedly asked staff to run town-by-town models to show how each proposal would change aid and local tax outcomes.

No formal votes or final actions were recorded at this session. Committee staff were asked to prepare fiscal notes and models — including a town-by-town spreadsheet — and to coordinate with the Legislative Budget Assistant (LBA) and the DRA for updated estimates and fiscal notes ahead of upcoming executive sessions.

Ending

Members agreed to continue the discussion at scheduled executive sessions next week and asked staff for fiscal modeling that shows the distributional effects by town and by proposal. The committee did not take a formal vote on any bill during this meeting.