Question: why doesn’t it use news.php?
This is due to a design decision.
If you look at the diagram for the Template Hierarchy, you will notice that the Blog Home page type (black box) has a line connecting directly to the home.html primary template (blue box) with no options in between.
If you go to the Edit page to update the page (News and Events) selected under the admin Settings > Reading > Post page by changing the template, you will see this warning message:
The posts page template cannot be changed.
When met with this warning message, you will also see a link inviting you to edit the Home template.
This WordPress support blog says this about the page selected for the Post page option:
Don’t add any content to this Page because it will be displaying your recent Posts – not any added content
Your goal can be achieved by using the Settings > Reading > Homepage option (seen under A static page (select below)). The page you choose here can use any page template you wish.
Another option is to use a Custom Front Page Template. Front page templates are commonly used to display static content.
You can use a secondary WP_Query loop with either a static Homepage or Custom Front Page to display a list of posts (like you would see on home.html). Take note of differences regarding pagination though. WordPress documentation says:
None of the WordPress Previous / Next page link functions work with a static front page.
Instead, you need to use WP_Query pagination options.