The Piermont School District serves just 68 students in one elementary school. Still, its small size offered no protection from rising special education costs this year. An unforeseen need for additional services pushed the district’s budget up 13.9% over last year. As a result, school property taxes jumped from $14.95 to $17.16 per $1,000 of valuation.
For homeowners, the impact is real. Someone owning a $350,000 home in Piermont will pay $775 more in annual taxes this year.
Rep. Rick Ladd sees Piermont as just one example of a widespread pattern. The Haverhill Republican represents the town and chairs the House Education Funding Committee. He points out that special education costs keep climbing. Local districts must absorb these difficult-to-anticipate expenses into the next year’s budget. Meanwhile, the state provides little relief. Districts currently shoulder 85% of special education costs themselves.
“I see this as our absolute top funding issue in education today,” Ladd said in January.
This year, House lawmakers want to boost state contributions. However, they’re starting small. Ladd sponsored House Bill 1563, which would tweak New Hampshire’s complicated special education aid formula.
“We are dipping our toe in the water at the level we can afford to pay,” said Rep. Daniel Popovici-Muller, a Windham Republican, during a recent House Finance Division II meeting.
Currently, school districts pay all special education costs until they reach 3.5 times the statewide average cost per pupil. That threshold sits around $75,000. Once costs hit that level, the state contributes 80%. State support then rises to 100% for expenses exceeding 10 times the average cost.
What Would Change
HB 1563 creates a new lower tier for students whose costs fall between 2.5 and 3.5 times the average. That range currently spans roughly $54,000 to $75,000. Under the proposal, the state would contribute 15% for students in this band.
Proponents acknowledge this tier is less generous than the 80% contribution level. Nevertheless, they argue it would still help districts with more students in that lower cost range.
The bill would increase state special education spending by approximately $22.5 million per year. Rep. Walter Spilsbury, a Charlestown Republican, cited “rough estimates” from the House Finance Committee.
The Trade-Off
However, the legislation includes a catch. The state would reduce aid for the most expensive students. Currently, New Hampshire pays 100% of costs exceeding 10 times the average—roughly $214,000. The new bill would lower that to 90%. Districts would then cover more of those highest costs themselves.
Additionally, the bill establishes a “risk-based monitoring” program. The Department of Education would audit 20% of districts annually to assess the accuracy of special education assistance claims.
The House Finance Committee unanimously recommended the proposal Wednesday. The full House will vote Thursday. Yet Democrats have raised concerns about the rushed process and last-minute changes. Some say the bill won’t adequately address rising costs.
In February, House Republicans defeated a Democratic alternative. House Bill 1557 would have required the state to contribute 80% for all costs above 1.5 times the average—a more dramatic increase.
Under Ladd’s bill, the new formula wouldn’t take effect until July 2028. Future state budgets would handle any increased payouts.
Defending the Approach
Supporters say the new lower tier could expand state assistance while also providing better visibility into individual costs. Currently, no state-level data exists on students with special education costs below the $75,000 threshold.
Lawmakers have also defended reducing the highest tier reimbursement to 90%. According to Department of Education estimates, districts with the 866 highest-cost students would still see net gains. They would collectively lose $1 million from the top-tier reduction but gain back $2.8 million from the new lower tier.
Popovici-Muller offered another rationale for the reduction. “I would like to see that school districts retain some skin in the game all the way up,” he said. This approach, he argued, gives districts incentive to control expensive out-of-state placements.
Some Democrats want more analysis before moving forward. Rep. Megan Murray, an Amherst Democrat, noted that even though districts with high-cost students would gain overall, individual outcomes may vary.
“It doesn’t mean that every district will have an increase,” she said. “Potentially, some districts will lose something.”
