From the Beacon, February 2018
Late last month, Gov. Charlie Baker submitted a $40.9 billion fiscal 2019 state budget plan to the Legislature, proposing a spending blueprint that would increase overall state expenditures by 2.6 percent.
The good news is that his budget includes a $37.2 million increase in unrestricted municipal aid, fulfilling the revenue-sharing commitment made by the Baker-Polito administration to cities and towns. This means that Unrestricted General Government Aid would grow by 3.5 percent, the same rate as the projected growth in state tax revenues. These funds are critically important to municipalities, as communities are still recovering from the deep cuts imposed during the recent recession, and we deeply appreciate this proposal.
The more challenging news is that the proposed fiscal 2019 budget offers a below-inflation increase for Chapter 70 school aid of 2.2 percent, or just $103.6 million, and level-funds a number of essential education accounts that are critical to ensuring that our public schools have adequate resources. These flat-lined programs include funding for charter school reimbursements and school transportation. The overwhelming majority of all cities, towns and school districts would only receive increases of $20 per student, and many of these communities would face drastic budget cuts due to growing assessments to pay for charter schools.
Unless the Legislature steps in to restore necessary education funding, communities across the state will be forced to decrease the quality of their K-12 school programs.
Here are four ways the state budget needs to step up its investment in educating schoolchildren:
1. Chapter 70: The proposed increase in this account is significantly smaller than in recent years, and 213 cities, towns and school districts would only receive an increase of $20 per student. This below-inflation increase would force these “minimum aid” communities to reduce school programs or further shift funds from the municipal side of the budget.
The MMA’s position calls for minimum aid of at least $100 per student, not the $20 amount offered. We also strongly support implementation of all of the recommendations of the Foundation Budget Review Commission to update the Chapter 70 “foundation budget” minimum spending standards for special education and employee health insurance, and to add to the spending standard a measure of recognition for the cost of services for low-income, English Language Learner and other students who would benefit from more intensive services. The commission recommended phasing in the changes over a four-year period, a position the MMA supports as well.
The governor’s budget bill (known as House 2) includes a partial reflection of one of these recommendations, which is to update the foundation budget to reflect the cost of employee health insurance. While the governor’s increased attention to this priority is certainly welcome, the amount is not enough to significantly increase aid to more than a handful of districts. A full commitment to fixing the foundation budget’s flaws is what is called for.
The financial consequences of the obsolete Chapter 70 formula are enormous. The preliminary data from fiscal 2017 show that cities, towns and regional school districts spent $13.1 billion in actual net school spending under Chapter 70, which is a staggering $2.5 billion (24 percent) more than the required amount in the outdated foundation budget. The state’s contribution totaled $4.6 billion, or only 35 percent of actual spending, the lowest state aid percentage since the depths of the Great Recession in 2009. This increasing reliance on the property tax and other municipal revenues to fund schools is not sustainable.
Unless the Foundation Budget Review Commission’s recommended corrections to the Chapter 70 formula are implemented, and minimum aid is increased to $100 per student, it is inevitable that the quality of public education here in Massachusetts will decline, undermining the state’s knowledge-based economy.
2. Charter school reimbursements: House 2 would level-fund charter school reimbursements at $80.5 million, well below the amount necessary to fulfill the statutory formula that is supposed to offset a portion of the Chapter 70 aid that communities are required to transfer to charter schools. Level-funding this account would lead to the continued and growing diversion of Chapter 70 funds away from municipally operated school districts (which educate 96 percent of all schoolchildren).
Statewide, communities are transferring more than 10 percent of all Chapter 70 money directly to charter schools, even though only 4 percent of students attend them. The governor’s budget would increase this imbalance, and place an extraordinary financial strain on many communities.
Charter school reimbursements are already $73 million below the funding level called for in state law, and this shortfall would grow significantly in fiscal 2019 to between $85 million and $100 million under the governor’s budget plan. That’s because communities would still be forced to increase their payments to charter schools by $67 million, even though reimbursements would be flatlined.
This dysfunction in charter school financing has reached a breaking point, and solving this breakdown must be a major priority during the budget debate.
3. Special education circuit breaker: House 2 would add $9.9 million to fund the Special Education Circuit Breaker program, bringing it to $291 million. The program, however, is already significantly underfunded in fiscal 2018. Because special education costs are rising in fiscal 2019, this means that the governor’s budget would likely underfund reimbursements by as much as $20 million.
This is a vital account that every city, town and school district relies on to fund state-mandated services. The MMA will again be asking lawmakers to ensure full funding in fiscal 2019.
4. School transportation reimbursements: House 2 would level-fund regional transportation reimbursements at $61 million. This would be a hardship for virtually all communities in regional districts, because transportation costs increase every year. If funding stays flat and costs rise, the result feels and acts like a funding cut.
Of course, communities are supposed to receive 100 percent reimbursement, but that is not what has been appropriated. Fortunately, the Legislature has added funds to this program in most years, and town and city leaders will be asking for increases again.
This is a critical time for cities, towns and local taxpayers. Massachusetts is starting to find some new vigor in its economy, but it is clear that the Massachusetts economy will only reach its full potential for statewide growth and job creation if all 351 cities and towns have the resources to adequately serve the residents, businesses and schoolchildren of the Commonwealth. That’s why these investments in municipal and education services are so important.

Written by Geoff Beckwith, MMA Executive Director & CEO