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How New Hampshire’s education adequacy formula works: base aid, differentials and the hold‑harmless schedule
Summary
Department of Education staff walked the committee through the components of the state adequacy formula — base adequacy aid, free‑and‑reduced differential, special‑education and ELL differentials, extraordinary‑needs grant and the phased‑out hold‑harmless program — including dollar amounts and statutory history.
Mark Manganiello of the Department of Education Bureau of School Finance reviewed the adequacy formula used to calculate state aid to school districts and the components that augment base aid.
He summarized the main components: base adequacy aid (staff cited $4,265.64 per average daily membership in residence for the year used in the packet), a free‑and‑reduced‑price‑meals (F&R) differential ($2,392.92 per eligible pupil in the packet example), special education differential aid ($2,184.84 per identified special education pupil), and an English‑language‑learner differential. Manganiello explained membership (ADMR) as the measure of students for whom the town is responsible and said the formula uses one year’s lagged student counts for district adequacy.
He described the extraordinary needs grant, which targets districts with low equalized valuation per F&R pupil; in fiscal 26 the maximum per‑pupil amount is $11,500, up from $8,670 the prior year. The packet’s example showed Albany and Allentown receiving modest extraordinary‑needs grants while Alton did not because its equalized‑valuation‑per‑F&R metric was above the eligibility threshold.
Staff also reviewed ‘‘hold harmless’’ payments that preserve a portion of prior aid for certain districts after recent formula changes. Manganiello said the hold harmless pool was estimated at roughly $59 million for fiscal 25 and that the law phases the pool down: fiscal 26 payments will be 80% of the fiscal 25 amount, fiscal 27 will be 80% of that same fiscal 25 baseline, fiscal 28 60%, and the hold‑harmless schedule will continue stepping down over a 10‑year period until it reaches zero.
He reminded members that some historic elements (stabilization grants) were removed in recent years and that the formula has many moving parts; changes to one component (for example, the F&R eligibility definition) can affect multiple grants. He also noted a recent statutory change to collect activity from home‑educated students who take district classes and convert course participation into ADM credit for modest statewide compensation.
Ending: Staff said the packet and line‑by‑line figures will be available to the committee during the budget process and cautioned members that changes to adequacy rates or eligibility often have multi-year effects on district budgets and on the Education Trust Fund.
