Committee hears competing proposals for catastrophic aid, Education Trust Fund and ‘swept’ property-tax reform

Committee members took up several related measures that would change how New Hampshire pays for very high-cost special-education students and how the statewide education property tax (commonly called “SWEP”) is collected and used.

Catastrophic aid (the high-cost reimbursement that used to be called Cat Aid) drew an initial hearing when Rep. Rick Ladd presented HB 717 to adjust thresholds and reimbursement formulas. Ladd and other speakers warned that current catastrophic-aid appropriations lag real claims: the committee heard that catastrophic reimbursements were being prorated (witnesses cited proration near two-thirds) and that a roughly $17 million shortfall had been identified in recent years. Ladd said changing the threshold and addressing proration were part of needed fixes, and that the bill provided a vehicle for continuing committee discussion and interstate comparisons.

The committee then pivoted to bills addressing the statewide education property tax and where any “excess” SWEP (the portion of local bills labeled “state education tax”) should reside. Rep. Dave Luno (HB 742) proposed removing catastrophic/special-education payments from an annual appropriation and instead drawing them, when needed, from the Education Trust Fund — a “must-pay” account that the state guarantees and that has procedures for covering shortfalls. Luno argued that drawing catastrophic payments from the trust fund would prevent last-minute prorations and protect districts from midyear shocks.

Several lawmakers and municipal officials pushed back on proposals that would require towns to remit so-called excess SWEP receipts back to Concord. Mark DeCoteau and a coalition of 21 municipal governments (Education Coalition Communities 2.0) opposed HB 675 and similar plans because returning local SWEP receipts to the state would force towns to re-raise the funds locally for their schools — effectively increasing local tax effort while removing local control. Coalition members said the 2011 law that allowed towns to retain excess SWEP for local educational purposes reflected negotiated state policy and that sweeping the funds back to Concord would produce winners and losers across the state.

Other witnesses, including Representative Lil Mahan (Lebanon School Board), urged caution about state-level spending caps and local-control limits embedded in related bills. Mahan said an across-the-board state cap on district spending risks layoffs or program cuts in places where local needs differ, and she urged the committee to preserve municipal and school-board discretion.

Representative Joe Sweeney’s larger proposal (HB 675) — a multi-part vehicle that raised the adequacy base, tied increases to CPI and proposed a local budget cap with a 2/3 override — drew extended debate on whether the state should expand the Education Trust Fund role and how to balance local control with broader tax relief goals. Sweeney and supporters argued the bill would give predictable funding while protecting taxpayers; opponents said it would limit local control and might harm small, rural districts.

Ending: The committee did not act on any of the SWEP or catastrophic-aid bills during the hearing. Members asked department and fiscal staff for detailed lists of towns that would be affected by remitting excess SWEP and for updated catastrophic-aid projections; they scheduled the items for further work-session review with DRA, DOE and LBA staff.