Bill that would shift portion of retirement contributions from taxpayers to state passes House

Published: 2/16/2019 9:56:45 PM

In the past 15 years, the amount of money towns and cities must pay into the New Hampshire Retirement System for their employees has more than tripled. For school districts, the contribution rates for teachers have quadrupled.

Over the same period of time, the state stopped contributing anything for employees in towns, cities and school districts. This downshifting of state costs has been one of biggest drivers of local tax increases in New Hampshire.

A bill that passed the House this week could lift part of that financial burden off municipalities paying into the state retirement system, saving towns potentially hundreds of thousands of dollars.

The bill, HB 497, would shift 15 percent of retirement contribution costs for police, fire and teachers back to the state and would cost the state $42 million in its first year.

New Hampshire’s taxpayers have been bearing the cost of funding the retirement system completely since the Legislature shifted the costs completely to municipalities in 2011 after contributing 35 to 40 percent for almost three decades.

In Concord, the school district alone is looking at contributing $6.5 million for its staff, including a $353,000 increase for teachers alone, said Business Administrator Jack Dunn.

That amount represents about 10 percent of the district’s proposed budget for next year. Having to pay 15 percent less of that cost would save the district about $981,515.

Hopkinton Town Administrator Neal Cass is keeping a close eye on the bill’s progress. He said the town’s total c ontribution to the retirement s ystem for the next fiscal year is $291,801 for police officers and firefighters. If the state picked up 15 percent of that contribution, it would save the town about $43,770.

“That would be pretty substantial for us,” Cass said Friday. “Every little bit matters, especially where it wasn’t too many years ago (the state was) paying 35 percent of that. We’ve had to absorb those costs over the last few years, so we’ve been watching this very closely.”

Over in Bow, the school district has about $2.3 million budgeted to pay into the state retirement system in the next fiscal year. If the state covered 15 percent, it would save the district more than $300,000, according to Duane Ford, assistant superintendent for business at SAU 67, which serves Bow and Dunbarton.

“Those savings, if there were some, at the end of the 2019-20 fiscal year would be part of the fund balance, which offsets how much we have to raise in taxes,” Ford said.

Dunbarton, which has one elementary school and sends students to Bow’s middle and high schools, would save about $35,000 if the bill becomes law.

Employer contribution rates have increased steadily since the downshifting. Teacher rates have gone from 11.3 percent in 2012 to 17.8 for 2020/2021. Police rates have increased from 19.9 percent in 2012 to 28.4 increase for 2020/2021. Fire rates have increased from 22.8 percent in 2012 to 30 percent for 2020/2021.

According to the bill’s fiscal note, the state would have to come up with $41.9 million in fiscal year 2020 to cover 15 percent of the system’s costs; those estimates goes up roughly $1 million over three years.

It’s not the first time such an effort has been made; aside from the effective date and tweaks to the cost estimations, the measure is identical to a bill state Rep. Renny Cushing, D-Hampton, put forward in 2017.

But it will be interesting to see whether a more Democrat-controlled Legislature will give this iteration more of a fighting chance.

Initially, Cushing’s first bill enjoyed bipartisan support, with over 60 percent of Republicans voting in favor of the bill when it cleared the House in 2017 in a 267 to 83 vote.

By the time the bill returned to the House floor after going through the House’s Finance Committee, the mood had changed – the bill was voted inexpedient to legislate, 172 to 166, with nary a single Republican voting to save the measure.

The bill that passed on a 256 to 120 vote on Thursday was mostly supported by Democrats, with only about 20 percent of Republicans voting in favor.

While Cushing said it’s hard to know what will happen when the bill goes in for a Fi nance Commitee work session on Wednesday. But he thinks the bill may have better chances this time around.

“A lot of people who ran for office this year did so with the promise to provide property tax relief,” he said. “...My bill last year, I don’t want to say it was partisan, but I think there were people who are not sympathetic to the plight of cities and towns.”

(Caitlin Andrews can be reached at 369-3309, or on Twitter at @ActualCAndrews.)

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