Legislature brings needed reform to building aid program
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While the New Hampshire Legislature was dealing with resignations and constitutional amendments, it was easy to lose track of some rather far-reaching legislation that will directly affect school districts across the state. The House and Senate last week agreed to overdue reforms to the state’s school building aid program.
For a history of the program and how it has worked over the years, you should read Daniel Barrick’s January 2011 report for the New Hampshire Center for Public Policy Studies, Under Construction. Seriously, it’s only 15 pages, and that’s with a lot of pictures. Go read it. I’ll be waiting right here.
As Barrick’s report shows, state spending on school construction subsidies ballooned from about $15 million in 1995 to over $50 million now. A wave of new schools across New Hampshire tapped into state aid that pays 30-60 percent of construction costs. This included $50 million schools in Bedford and Windham, leaving some lawmakers wondering why state taxpayers were picking up so much of the tab for local spending decisions. With no real cap on the state’s generosity, the building aid program exceeded the Legislature’s ability to pay for it.
Faced with this fiscal reality, our government in 2009 decided to ignore it. Rather than cut total building aid spending, target the program to districts most in need of state help, or cut spending elsewhere, the Legislature and Gov. John Lynch decided to borrow. They shifted building aid from the state’s operating budget to the capital budget, increasing the state’s debt and covering up a mounting deficit.
From 2009 to 2011, New Hampshire borrowed $131 million to meet its annual building aid obligations. Even supporters of bonding building aid realized this was not a permanent solution, so they put a moratorium on new projects entering the program.
Even with no new schools getting assistance, the state still need to pay off $550 million in previously approved projects, and $188 million in debt services payments for the three years of borrowing.
Future legislatures will be getting two bills, annual payments for local bonds and bond payments for the state’s debt service. And that’s without making any promises for new school construction.
This year’s legislation sets up a priority system for future building aid projects, rather than the old system where every district was almost automatically qualified. As Barrick recommended last year, this will not only force local districts to put a little more thought into their construction projects but also leverage limited state aid toward districts that need it most.
The bill also caps the state’s annual building aid program to $50 million, which is about what we’re already paying for schools that have already been built, outside of debt service. But as more and more school bonds are paid off, more capacity for new projects will come open.
Nor is the $50 million all that tough a burden. The next Legislature can break it simply by writing a higher number into the next budget. The cap is aspirational, functioning like a post-it note on the freezer telling you to eat less ice cream. It’s really easy to ignore the note or throw it away, but having it their encourages discipline.
Please note that there is no constitutional right to adequate construction subsidies. The Supreme Court has not mandated that the building aid program resume, and no one is threatening a lawsuit if the Legislature doesn’t give them money for their proposed middle school.
Despite the protestations of my liberal friends, politicians historically have not needed a court order to spend money. The skinflint Republican Legislature that they fear will abandon public schools has restored a state assistance program that Democrats suspended. Whether it’s a good idea to continue to subsidize local school construction is an open question for lawmakers and voters to decide.
School buildings don’t last forever. They need to be repaired, refurbished, and eventually replaced, but demand for new schools if dropping across New Hampshire.
New Hampshire’s school aged population is falling. Enrollments are dropping, along with the classroom crunch that spurred the building aid spike over the last two decades. Taxpayers still have more than a half-billion dollars in bills to pay from the Legislature’s past promises. This year’s reforms mean that future legislatures will have to be a little more careful in the promises they make.
(Grant Bosse is lead investigator for the Josiah Bartlett Center for Public Policy, a free-market think tank based in Concord.)
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