Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
His Excellency Charles D. Baker
Governor of the Commonwealth
State House, Boston
Dear Governor Baker,
On behalf of the cities and towns in every corner of the state, the members of the Massachusetts Municipal Association are deeply grateful for your commitment to achieving a powerful local-state partnership to move the Commonwealth forward in the coming years. We look forward to working with you and your administration to bring stability and strength to municipal and state finances and key policy priorities.
A strong and enduring partnership between cities and towns and state government is essential to a healthy and expanding economy and to the ability of local government to provide world-class education and municipal services, ensure safe streets and neighborhoods, and maintain local roads and vital infrastructure. This is fundamental to our state’s economic success and competitiveness.
We are writing today to provide you with background information on important funding priorities and investments in key municipal and school aid programs that will be included in the fiscal 2016 state budget bill that you will file in early March.
As you know, the deep recession and tepid economic recovery have undermined the fiscal health of cities and towns, and communities will continue to face enormous fiscal challenges unless the Commonwealth embraces a revenue sharing approach to reinvest in local aid. Despite a tightly capped property tax due to Proposition 2½, municipalities are more reliant on the property tax to fund essential services than at any time in the past 30 years. Adequate funding for municipal and education aid is necessary in order for cities and towns to provide the basic local and school services that the residents of Massachusetts deserve and expect, and to mitigate today’s overreliance on the most regressive of the major revenue sources in the state, the property tax.
UNRESTRICTED GENERAL GOVERNMENT AID (UGGA)
We strongly support an increase in the Cherry Sheet Unrestricted General Government Aid (UGGA) account of at least the same percentage that state tax collections for fiscal 2016 are forecast to grow through the state “consensus” revenue process, including distribution of the full municipal share of Lottery revenue. The UGGA account is currently funded at $945.75 million. We are deeply thankful to you and the members of the Legislature for rejecting Governor Patrick’s unwise proposal to implement a $25.5 million cut as a means of closing the state’s mid-year budget deficit.
Municipal aid was cut deeply during the recession and this year remains $368 million below the fiscal 2008 level of funding, without adjusting for inflation. Accounting for inflation, UGGA is over $400 million below fiscal 2008 levels. With local aid levels reduced so deeply, cities and towns have eliminated over 15,000 jobs, reduced many core services, and increased their reliance on the property tax, which is at a 33-year high point.
Fiscal 2008 $1,313,546,271
Fiscal 2014 $920,230,293
Fiscal 2015 $945,750,000
State Tax Revenue Growth 4.8% $45,396,000
Requested Fiscal 2016 Funding $991,146,000
Linking UGGA funding to the growth in state tax revenues would simply mean that unrestricted aid would track the growth in the state’s revenue capacity, no more and no less, and would provide cities and towns with much-needed funds to deliver vital services that are critical to our overall economic growth, and ensure that today’s municipal overreliance on the property tax will not deepen. We appreciate your support for this revenue sharing framework, and urge its full implementation in your fiscal 2016 budget submission. Following the consensus state tax revenue growth forecast of 4.8 percent, this translates into a much-needed $45,396,000 increase in funding. As you can see from the numbers listed above, UGGA funding would still be $322,400,271 below fiscal 2008 levels.
During your successful campaign for the Corner Office, we note that you agreed with the MMA’s call to increase UGGA by the same rate of growth in state tax revenues, with the condition that in your first budget, you would provide a minimum of 75 percent of the growth rate, and provide 100 percent each year thereafter. Following this framework, the range for the increase in UGGA funding would be $34,047,000 to $45,396,000. Given the fiscal challenges confronting communities in every corner of the state, we respectfully request that the revenue sharing framework be fully implemented in fiscal 2016 by funding UGGA at $991,146,000.
Beginning in fiscal year 2016, it is forecast that the Commonwealth will receive gaming revenues from the Plainridge Park Casino facility of between $80 million to $100 million. These funds are intended to flow directly into the Gaming Local Aid Fund for the primary purpose of funding Unrestricted General Government Aid. Even with some loss in Lottery revenues, this is more than enough to fund the full $45,396,000 increase requested.
CHAPTER 70 SCHOOL AID
We strongly support a sufficient funding increase for Chapter 70 school aid to ensure that all municipal and regional school districts are able to reach the “foundation” level of spending, implement the target share/down payment aid equity provisions adopted in 2006, and provide an adequate amount of minimum aid that ensures that all schools receive an increase in fiscal 2016, which we believe should be at least $100 per student.
A significant majority of school districts only receive minimum aid, which is why the minimum aid aspect of Chapter 70 is so important. In fiscal 2015, the Chapter 70 growth of $99.5 million was one of the smallest increases in the past 20 years, and included minimum aid of only $25 per student. Most districts received such a small increase that they had to reduce programing, increase their reliance on the property tax or divert funds from the municipal side of the budget.
Recognizing that the Foundation Budget Review Commission will not file its report until mid-2015, far past the deadline for submitting House One, we strongly urge you to adopt a $100 per student minimum aid level to prevent further erosion in school financing at the local level, and ask that you continue to implement the target share/down payment aid equity provisions. This level of funding is clearly achievable within the context of the 4.8 percent growth in state tax revenues.
SPECIAL EDUCATION “CIRCUIT BREAKER”
We support full funding of the Special Education “Circuit Breaker” Program through which the state provides a measure of support for services provided to high-cost special education students. Under section 5A of Chapter 71B of the General Laws, the state’s share is 75 percent of costs that exceed four times the state average per pupil foundation budget. This is an essential program that provides critical funding to assist all school districts with the increasingly burdensome and volatile cost of complex and expensive special education services.
The MMA and municipal and school officials appreciate the Legislature’s demonstrated record of commitment to full funding for this vital program. The $257.5 million appropriation in the Legislature’s fiscal 2015 budget fully funded the state’s full statutory reimbursement obligation this year. However, Governor Patrick’s mid-year 9C reduction cut $3.86 million, forcing communities to adjust to a 1.5 percent shortfall with no warning.
Cities and towns are providing special education services under a mandate imposed by state government, and communities recognize the importance of these services to the school children who rely on these programs to achieve their maximum educational potential, which is why cities, towns and school districts are committed to meeting their obligations as mandated by the state. The Circuit Breaker formula is intended to partially fund the state mandate, and thus we know this program resonates with you, as you have clearly outlined your opposition to imposing unfunded mandates on local taxpayers.
Looking ahead to fiscal 2016, we respectfully ask that the Special Education Circuit-Breaker be restored to full funding, which would require restoring the $3.86 million mid-year cut, and adding the funds necessary to keep pace with inflation.
REIMBURSEMENTS FOR SCHOOL AID LOSSES RELATED TO CHARTER SCHOOLS
The diversion of Chapter 70 school aid away from public schools to pay tuition to charter schools has imposed a major and growing financial burden on cities and towns, a problem made more acute as the state grants more charters and existing charter schools expand. Local officials strongly support full funding of the Commonwealth’s commitment under Section 89 of Chapter 71 of the General Laws to reimburse school districts for the loss of a portion of their Chapter 70 aid that is redirected to fund charter schools.
In fiscal 2015, it is expected that cities and towns will be forced to divert more than $400 million to fund charter schools, nearly 10 percent of all Chapter 70 dollars. This illustrates the importance of this issue to local governments, and is why it is critical for the state to meet its commitment to this program. The $80 million appropriation in the fiscal 2015 general appropriations act was $33 million below the full funding amount required in the statutory formula, which was signed into law only a few years ago. The problem has deepened with two rounds of 9C cuts to this account ($3.1 million), increasing the fiscal 2015 shortfall to over $36 million.
The funding shortfall means that cities and towns are receiving a fraction of the reimbursements due according to state law, and this is impacting a large number of communities. When charter school reimbursements fall short, communities are forced to cut other programs and services to make up the difference. Of the 20 cities and towns with the largest shortfalls, ranging from $250,000 to over $10 million, most of them have been deemed by the state to have underperforming schools. These include some the state’s poorest and most financially distressed cities and towns. Thus, the underfunding of the charter school reimbursement formula is harming the most vulnerable and challenged school districts and communities.
We continue to call on the Commonwealth to close this year’s $36 million gap, and to also appropriate the full amount necessary to meet the state’s statutory obligation in fiscal 2016.
STUDENT TRANSPORTATION REIMBURSEMENTS
Another critical budget priority is funding to assist cities, towns and school districts with the cost of transporting school children. There are four aspects to this important budget priority: 1) reimbursements to regional districts; 2) the transportation of homeless students under the McKinney-Vento program; 3) transporting out-of-district vocational students; and 4) renewed reimbursements to regular (non-regional) school districts. A brief summary of each of these transportation funding issues follows below.
1) Funding for transportation reimbursements to regional school districts is vital to all regional districts and their member cities and towns, particularly in sparsely populated parts of the state. The Legislature appropriated $70.25 million for fiscal 2015, but Governor Patrick used his 9C powers to cut the amount in mid-year by 27 percent, an unexpected $18.7 million loss, returning the program to fiscal 2014 levels just months after the Legislature gave top priority to coming closer to full funding. Decades ago, the state promised 100 percent reimbursement as an incentive for towns and cities to regionalize, and the consistent underfunding of this account has presented serious budget challenges for these districts, taking valuable dollars from the classroom. We respectfully ask that, at a minimum, House One restore the $18.7 million mid-year cut.
2) In fiscal 2013, the state budget provided $11.3 million to fully fund the state-mandated costs that resulted from the Commonwealth’s adoption of the federal McKinney-Vento Act. The State Auditor ruled that the McKinney-Vento program was an unfunded mandate on cities and towns, and we appreciate the action the Legislature took to provide full funding soon after that ruling. Under the program, communities are providing very costly transportation services to bus homeless students to schools outside of the local school district. However, the fiscal 2014 state budget reduced McKinney-Vento reimbursements to $7.35 million, underfunding this state mandate. Full funding for fiscal 2015 is estimated at $14.8 million, but the Commonwealth level-funded the program at $7.35 million, creating a shortfall of over $7 million in the current fiscal year. We respectfully ask that House One fully fund this state mandate, which would require $14.8 million plus the amount necessary to meet rising costs.
3) The fiscal 2014 state budget included a $3 million item to reimburse communities for a portion of the cost of transporting students to out-of-district placements in vocational schools, as mandated by state law. This account recognizes the significant expense of providing transportation services for out-of-district placements, as these students must travel long distances to participate in vocational programs that are not offered locally. In spite of the fact that full funding was estimated at $3.8 million, the Legislature reduced the fiscal 2015 appropriation to $2.25 million, and then Governor Patrick decided to wipe out all funding with his November 9C cuts, a painful mid-year loss. We respectfully ask that you restore this funding in your fiscal 2016 budget submission.
4) Finally, we support a renewed reimbursement program for non-regional school districts to help fund a portion of the burden of student transportation costs. The program was removed from the state budget during a time of economic distress. Restoring funding would benefit school districts in every corner of the state, and would provide important relief that would allow communities to use more of their Chapter 70 aid and local property tax dollars in the classroom.
PAYMENTS IN LIEU OF TAXES
We support full funding of the Commonwealth’s obligations and commitments to the program for payments in lieu of taxes for state-owned land (PILOT). This is a particularly important program for the cities and towns that host and provide municipal services to state facilities that are exempt from the local property tax. This account is underfunded funded at $26.77 million, and it is still below the $28.3 million funding level provided in fiscal 2008.
SHANNON ANTI-GANG GRANT PROGRAM
We support continued funding for the Shannon anti-gang grant program that has helped cities and towns respond to and suppress gang-related activities. The program was funded at $8.25 million in the fiscal 2015 General Appropriations Act, and was reduced by $1.25 million in February. We respectfully ask that you restore this important crime prevention program to its full funding level of $8.25 million in House One.
A LOCAL AID RESOLUTION TO FACILITATE TIMELY BUDGET DECISIONS AT THE LOCAL LEVEL
Cities, towns and regional school districts need timely notice of the main municipal and school aid accounts in order to prepare and approve forward-looking local revenue and spending plans. We ask that state leaders secure an agreement on our requested Unrestricted General Government Aid (UGGA) amount for next year, and also agree on a methodology for calculating Chapter 70 local contribution and school aid levels. An agreement would set the stage for a consensus Local Aid Resolution and a commitment to minimum municipal and school aid amounts during March. This would avoid the very difficult budget challenges that occurred in fiscal 2014 for regional school districts and member cities and towns when required local contributions were not finalized until mid-July.
SUMMARY
This is a critical time for our economy, and for cities, towns and local taxpayers. We know that you will be an outstanding partner for communities across the Commonwealth, and look forward to working with you to make real progress over the next four years. Massachusetts is starting to find some new vigor in its economy, but it is clear that the Massachusetts economy will only reach full its full potential for statewide growth and job creation if all 351 cities and towns have the resources to adequately serve the residents and businesses of the Commonwealth.
Thank you very much for your support, dedication and commitment to the cities and towns of Massachusetts.
Sincerely,
Geoffrey C. Beckwith
Executive Director, MMA
cc: The Honorable Karyn Polito, Lt. Governor of the Commonwealth
Secretary Kristen Lepore, Executive Office for Administration and Finance