Today the House Education Committee held a hearing on HB1303, a bill authored by Arthur Green to make issues associated with withdrawing from a cooperative district more explicit.
The room was packed with listeners and the committee showed a lively engagement with the testimony. They asked quite a few questions of me, Arthur and the representative from the NH School Boards Association.
Here is my written submission followed by Arthur’s written submission.
A bill addressing 195:25-30, the withdrawal procedure of a town from a cooperative school district.
Withdrawing from a cooperative district can be as ugly and contentious as a divorce because there are many millions of dollars on the line with ramifications for thousands of people, many of whom are children. Unfortunately, the law for this kind of divorce is no where near as explicit as marital divorces even though the stakes are much, much higher.
Sandown’s invocation of 195:25 in exploring withdrawal from the Timberlane Regional School District has exposed three major issues with the current law and that have cost our town and the school district unnecessary legal fees for inconclusive opinions.
- When can a minority report be submitted to the Board of Education?
- How to give the withdrawing town a final say on the withdrawal plan?
- How are the financial obligations to both parties calculated?
(The author of HB1301, Arthur Green, will be speaking to the financial aspect of the current legislation.)
MINORITY REPORT: At present, the law provides for the submission of a Minority withdrawal plan if the official committee finds that withdrawal is not feasible and suitable.
The Timberlane official committee argued that the “if” is prohibitive – that is, the “Minority” withdrawal plan can be submitted only if the official committee chooses not to submit its own withdrawal plan. It is our position that the “if” is permissive, and does not block submission of a minority plan. However, the existing wording does allow the prohibitive interpretation and this is what this inexact wording led to.
Influential members of the official withdrawal committee threatened to submit a “hostile” withdrawal plan that Sandown could never agree to in order to block the submission of our own minority withdrawal plan. In the end they didn’t do this because the threat was enough for the Board of Selectmen to dissolve the town’s minority committee.
The proposed change would clarify the legislature’s intent to allow a “Minority” withdrawal plan, and would save the taxpayers needless legal costs in fighting whether a town has a right to submit a “Minority” withdrawal plan to the Board of Education (and whether the Board of Education is allowed to consider such a plan if submitted).
If the law is not changed, the Timberlane template will be copied by other cooperative districts in the state wishing to prevent withdrawal of a town, and the “Minority” provision of the law will become a right only on paper.
THE FINAL VOTE: The law currently requires a majority vote of the entire district to approve the withdrawal plan if sent to ballot by the Board of Education. The revised wording requires that there also be a majority within the withdrawing town.
At present, the vote by the initiating town for a study under RSA 195:25 begins a process in which the town has no further decisive voice. This change would ensure that the withdrawal plan emerging from the study cannot go into effect unless it has the support of the withdrawing town.
Part and parcel of the ingenious hostile withdrawal plan came the suggestion that a withdrawal plan with a $6 million price tag could go to district vote – over the objections of Sandown – and voters of the district as a whole could very well vote to expel Sandown from the district to reap this $6 million buy-out fee from Sandown.
By inventing the idea of a hostile withdrawal plan, Timberlane has turned the statutory plan for withdrawal on its head, creating a template for any other cooperative district to use against any town considering the 195:25 process, ultimately frustrating the State’s interest in an orderly withdrawal process.
The proposed requirement for a “double majority” would remove this threat by giving the withdrawing town a final veto on the plan, even if approved by the district as a whole.
We ask you to support changes to the current legislation that would protect the right of a town wishing to withdraw to submit a report regardless of the official plan submitted, and to also give the withdrawing town another opportunity to vote on the final plan.
Sandown Representative to the Timberlane Regional School Board on her own behalf.
Jan. 27, 2016
I’m Arthur Green, Sandown resident and past member of the Budget Committee for Timberlane Regional School District, and the originator of these changes. Many thanks to the State Representatives and Senators who stepped forward to sponsor this proposal.
I am sure that all of us agree that a town withdrawing from a cooperative school district has no business walking away with facilities paid for by the remaining towns, and this is specifically what the RSA deals with.
For many cooperatives, the issue does not arise. For example, the Exeter cooperative covers Middle and High School only. Pre-existing member districts like Brentwood have their own school districts and boards covering elementary school, which retain possession of those buildings. So if Brentwood were to withdraw from Exeter, there would be no buyout, and Brentwood would simply forfeit its notional equity in the cooperative district facilities.
In the case of Timberlane, the cooperative district covers pre-K through 12, and owns all the elementary schools of the member towns, hence triggering RSA 195:28.
Cost of capital improvements to these facilities is not a matter of opinion, it is a matter of fact in the district’s financial records, albeit requiring some research to determine those costs from archived paper records.
Contribution of Sandown to the district’s capital costs is not a matter of opinion, it is explicit in the annual reports because capital costs are separately allocated to the towns.
The key phrase generating disagreement is “less the share which the withdrawing school district has already paid toward such costs”. But how much has a town “already paid” toward the cost of a specific building? The district’s financial systems do not track town equity to individual facilities, and the RSA does not specify how this would be calculated.
The TRSD position may be summarized as follows: Sandown contributes about 18% of the capital (on average), so Sandown is deemed to have “paid” for 18% of Sandown North school, 18% of Sandown Central School, 18% of the Timberlane Regional High School, 18% of Danville Elementary school, and so forth through all the facilities of the district. If Sandown wishes to withdraw, since the other towns have “paid” for 82% of the 2 Sandown facilities, Sandown must pay the district back 82%. The district’s preliminary assessment of the dollar amount is $6.4 million.
As a matter of fact, Sandown has contributed $15 million in capital to the entire district’s facilities over the life of the cooperative. The district’s total investment in Sandown facilities is about $8.4 million (net of Building Aid). By the district’s interpretation of the RSA, Sandown is credited with only $2 million (that 18%). They are claiming that to exit the district, Sandown would owe an additional $6.4 million. Not only that but we would forfeit $13 million out of the $15 million in capital contributions Sandown has already contributed to the entire district.
It would be natural for people who are not close to this issue to assume that Sandown has, over time, underpayed for the investments made within the town, and it is only right that the other towns be made whole.
But on the logic of the district, it is impossible for any town to have already paid the cost of such expenditures. No matter how many years, or how much or little is invested within a town, that town’s equity in those facilities can only be the 18% (or whatever that town’s proportion of the district capital allocation).
In effect, this establishes a multi-million dollar buy-out obstacle to any town wishing to withdraw from any cooperative district, so long as that district is structured owning the elementary schools. When the legislature wrote 195:28, did they intend to create an insurmountable obstacle to withdrawal? Or did they intend to ensure that a town does not exit with facilities paid for by the other member towns?
Our view is that the existing legal wording is compatible with the idea that the withdrawing town’s full record of capital contributions be taken into account. Sandown, having paid $15 million to the district, has more than paid the cost of facilities within Sandown, and would be forfeiting about $4 million of contributions to shared district facilities, a situation similar to Brentwood withdrawing from the Exeter cooperative.
However, the existing wording allows multiple interpretations. The amendment we offer clarifies the situation by making it explicit that, in this situation, a town’s capital contributions are “credited” first to the facilities within the town. This will save the taxpayers needless legal costs (on both sides of the issue) in disputing the calculation of the buyout fee.
If the Timberlane district’s interpretation of the RSA prevails, it will effectively prevent withdrawal of any town from any cooperative structured as is Timberlane. It will also mean that no towns in future would ever consider entering this form of cooperative organization. Is it in the state’s interest to encourage the formation of cooperative districts, to gain economies of scale? If so, then it is also in the state’s interest to have a predictable, fair and non-punitive process for withdrawal. If this is what the legislature wants, we ask you to adopt this change.