New Hampshire subcommittee presses DOE on special-education aid process, data and Medicaid interactions

The New Hampshire Legislature’s Special Education Aid Subcommittee heard an overview Tuesday of how the state collects and reviews costs for special-education services and catastrophic or “Catastrophic Aid,” and members pressed the Department of Education for more consistent financial data and clearer rules about Medicaid and out-of-state providers.

Chair of the subcommittee opened the meeting by saying the session was the panel’s third, calling attention to prior testimony from HHS and district directors and saying the group aims to address state aid shortfalls that force local districts to cover special-education costs from general funds. “We learned a lot,” the chair said, noting a prior estimate from HHS that the state currently receives about $8,800,000 from Medicaid for school services and may be leaving roughly $4 million to $5 million on the table.

The issue matters to districts statewide because the department prorates the dollar pool for catastrophic aid when total eligible claims exceed the appropriation; the chair said that proration this year is “roughly around 68%.” That shortfall, subcommittee members said, leaves local districts to absorb a large share of costs for high-need students.

Rebecca Ferdette, Director of Special Education Services at the New Hampshire Department of Education, described current data and upload requirements and how invoices are reviewed for special-education aid. “NESIS, the New Hampshire Special Education Information System, is used by every district in the state and every child in special education must be entered into NESIS,” Ferdette said. She added that six districts do not use NESIS to develop individualized education programs (IEPs) but do provide required data points.

Ferdette explained how financial claims are tied to the IEP and reviewed in the financial portion of NESIS: districts submit invoices and supporting documentation (scanned and attached to the student file), and the department compares invoices to the IEP when determining allowable reimbursement. “If a student is receiving two units of speech and language a week, they submit an invoice for two units,” Ferdette said. If the invoice shows more sessions than the IEP documents, the department will pay only for the IEP amount.

Lawmakers pressed on several practical gaps they said make statewide forecasting and policy changes difficult. Key deadlines and processes identified on the record include: invoice and documentation submission for special-education aid by July 31 following the school year, and a superintendent verification form due to the department by August 15. The department’s monitoring and program-approval cycle was described as a six-year cyclical process (the transcript repeatedly described it as six years) and the monitoring office currently has seven staff who conduct two cohorts per year within a bureau that Ferdette said employs about 24 people.

Members raised questions about variation in how districts track students for catastrophic aid. Ferdette said districts set their own practices: some districts track potential catastrophic-aid students from the start of the year, others wait until the end of the year and submit only selected claims. That variation limits the department’s ability to use NESIS data to estimate how many students would fall into alternative funding thresholds such as “2.5 times” the per-pupil cost, a proposal under discussion.

The committee also discussed interactions between Medicaid billing and catastrophic aid. Ferdette said the department does not require districts to remove Medicaid reimbursements from the catastrophic-aid cap calculation, and the department has not established a rule that subtracts Medicaid receipts before calculating special-education reimbursement. She and members agreed that because Medicaid school-reimbursement rates are generally low, they typically will not exceed the district’s local share under the catastrophic-aid formula. Still, several members urged clearer guidance and tighter procedures to avoid errors or duplicate claims.

Members asked about rate-setting and out-of-state placements. Ferdette said the department sets tuition rates only for in-state approved private special-education providers (she identified about 22 approved in-state providers) after reviewing provider cost submissions. The department does not set hourly rates for individual services (speech, OT, PT) provided by contractors. For out-of-state providers, Ferdette said New Hampshire’s approval relies on the licensing/approval status in the provider’s home state: “If they’re approved in Massachusetts by Massachusetts, then we will approve them within New Hampshire for special education. If they’re not approved, then we would not approve them as a provider for a New Hampshire student.”

Multiple members asked whether the department or the legislature has authority to require districts to submit richer financial data for every IEP; Ferdette said the current statutory authority does not require districts to submit full financial detail for every child and that collecting full statewide financial data would be a “heavy staff lift” for districts and the department. She said the department is moving NESIS into a new statewide student information system called Index (Index is being developed by Alma), and that the department is working with Index’s vendor and stakeholders to integrate special-education functionality; Ferdette said the new combined system is hoped to be in place in time for the 2026–27 school year.

Lawmakers discussed alternate approaches that may be less burdensome than requiring every district to submit all invoice lines for every child: they debated asking a sample of representative districts to submit complete data or creating a regional or state-coordinated billing unit to help smaller districts submit Medicaid claims and manage reimbursement. Several members referenced Colorado’s cooperative billing approach as an example discussed earlier.

Committee members requested follow-ups including: samples or walkthroughs of the existing NESIS submission process while the new Index system is built, a copy of districts’ procurement policies for contracted services, and details on the department’s monitoring reports (Ferdette said monitoring reports are provided to districts and redacted public versions are posted on the DOE website). Members also suggested field visits to high-cost residential providers (examples discussed included Spalding Youth Center and similar facilities) and soliciting input from parents and advocates.

The subcommittee did not take formal votes at the meeting. Members scheduled follow-up work and flagged several bills on the legislative calendar that overlap with the discussion (including House Bill 773 as amended in committee, retained House Bill 742, and Senate Bill 292), which will be considered in forthcoming committee sessions.

Ending: The department’s staff described administrative deadlines and monitoring processes on the record; legislators called for more consistent financial reporting to support choices about funding thresholds and potential rate-setting. The subcommittee’s next steps include targeted requests for documentation, possible field visits, and a follow-up meeting to shape legislative options ahead of upcoming calendar deadlines.