NH Department of Education
Division of Program Support
Bureau of Data Management
August 16, 2004
FY05 Adequacy Aid Formula
The passage of SB302 in 2004 made significant modifications to Adequacy Aid. The new aid calculation has three component formulas for determining the Total Cost of Adequacy for each town. The first two components use an Average Per Pupil Adequacy Cost.
Average Per Pupil Adequacy Cost
This cost is set for each biennium. (The 03-04 and 04-05 school years are the current biennium.) The Average Per Pupil Adequacy Cost of the previous biennium is adjusted for inflation as measured by the Northeast Consumer Price Index. The annual rate of inflation for the most recent four calendar years is averaged and then doubled. (It is doubled because the adjustment is for a two year change.) The prior biennium's per pupil cost is then increased by this percentage.
Total Cost of Adequacy for Each Town (3 components)
Per Pupil Cost Allocation
The Average Daily Membership (ADM) in residence is adjusted by excluding preschool students and limiting the count for full-day kindergarten students to one-half. The ADM is then multiplied by the Average Per Pupil Adequacy Cost.
Low Income Allocation
Students eligible to receive free or reduced priced meals or free milk are counted. The count is multiplied by 60% of the Average Per Pupil Adequacy Cost.
Property Poor Allocation
The total amount available for the property poor allocation is set to equal the total low income allocation.
Equalized valuation is the "fair market value" of regular property plus an adjusted value for current use land. The equalized value of property in each town is divided by the town's ADM to determine the equalized value per pupil. Each town's equalized valuation per pupil is compared to the state average. If the town's equalized value per pupil is more than 10% below the state average then an aid allocation is made. The exact amount depends on the difference between town and state per pupil rates, the number of pupils in the town and the total aid allocation, but the lower the equalized value per pupil, the greater the aid per pupil will be.
Total Cost of Adequacy
The Total Cost of Adequacy for each town is determined by summing the three component allocations.
Statewide Education Property Tax
For FY05 the Statewide Education Property Tax (SWEPT) is set at $3.33. In future years, this rate will be adjusted so that the amount of revenue generated will remain the same.
Distribution of Funds
School districts receive the Total Cost of Adequacy. The town government sends an amount equal to the SWEPT to the school district. If the SWEPT is less than the Total Cost of Adequacy, the balance is distributed by the state on the following schedule: 20% September 1, 20% November 1, 30% January 1, 30% April 1. If the amount of the SWEPT assessment exceeds the calculated Total Cost of Adequacy, the excess is returned to the state by March 15th.