The Honorable Aaron Michlewitz, House Chair
The Honorable Michael J. Rodrigues, Senate Chair
The Honorable Ann-Margaret Ferrante, House Vice Chair
The Honorable Cindy F. Friedman, Senate Vice Chair
The Honorable Patricia A. Haddad, House Assistant Vice Chair
The Honorable Joanne M. Comerford, Senate Assistant Vice Chair
The Honorable Todd M. Smola, Ranking House Minority Member
The Honorable Patrick M. O’Connor, Ranking Senate Minority Member
Joint Committee on Ways and Means
State House, Boston

Delivered electronically

Dear Chair Michlewitz, Chair Rodrigues, and Distinguished Members of the Joint Committee on Ways and Means:

On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association very much appreciates your strong support of local government. We look forward to working with you and your colleagues in the House and Senate in developing and finalizing a state spending plan for fiscal 2025 that reflects your continued commitment to a strong state and local partnership.

In every region of Massachusetts, cities and towns rely on a strong and supportive state-local relationship to maintain critical services. With a tightly capped property tax that limits municipal revenues, cities and towns require predictable and adequate state revenue sharing in order to provide world-class education and municipal services, ensure safe streets and neighborhoods, and maintain local roads and vital infrastructure.

We are writing today to provide you with information on important priorities in key municipal and school aid programs, and ask that you incorporate these requests into the fiscal 2025 state budget bill that you are preparing for House and Senate debate in April and May.

Unrestricted General Government Aid and iLottery
Cities and towns across the state are asking the Legislature to provide a strong and effective commitment to revenue sharing by increasing Unrestricted General Government Aid (1233-2350) for fiscal 2025 by at least 3%, as well as protecting the main source of dedicated revenue for UGGA: the Massachusetts State Lottery.

Over the last two fiscal years, the Legislature made the critically important decision to increase UGGA above the percentage increase in forecasted state revenue growth. In fact, the last two years increased by double the consensus revenue figure, which was an essential investment by the Commonwealth that directly supports each and every community in Massachusetts. This funding helped to make steady progress back from the devastating funding cuts during the Great Recession — funding that still has not recovered. For every city and town across the Commonwealth, this means that municipal budgets rely even more heavily on the local property tax, which is capped under Proposition 2½. Even with the Governor’s strong proposal of a 3% increase to UGGA for fiscal year 2025, the UGGA account still remains below pre-Great Recession levels, without adjusting for inflation.

The following chart shows the UGGA funding allocations from fiscal year 2008 through the Governor’s proposal for fiscal year 2025:

UGGA provides essential funding for vital municipal and school services, allowing communities to deliver core services to residents and businesses. As the state continues to address a statewide housing crisis, it is worth noting that underfunding UGGA exacerbates the challenges regarding housing affordability due to an overreliance on property taxes.

Being mindful of the state’s cautious fiscal outlook for 2025, we respectfully ask for your consideration of an UGGA increase of at least 3%.

As we discuss the need for a strong state-local fiscal partnership, the conversation also involves the largest revenue source that the state uses to fund local aid: the Massachusetts State Lottery. More than 50 years ago, the Lottery was established for the sole purpose of supporting cities and towns. According to the State Lottery Commission, in the most recently completed fiscal year (fiscal 2023) the Lottery generated $1.193 billion in net proceeds to the state, which represented approximately 97% of the funding provided by the Commonwealth’s for Unrestricted General Government Aid.

In House 2, the Governor has included an outside section that would provide for the creation of an online lottery platform, or iLottery. Estimates from the Administration have contemplated roughly $75 million initially to be generated from iLottery, with future projections to be much higher.

It is imperative that any new platforms of the Lottery continue to support the original mission of the Massachusetts Lottery, to directly support cities and towns through funding of local aid. Dedicating all revenue from the iLottery platform to cities and towns will provide a needed source of funding for the Commonwealth as it seeks to maintain its commitment to stable revenue sharing through UGGA. Conversely, allowing iLottery revenues to be siphoned off for other purposes could threaten existing revenue options for revenue sharing should traditional Lottery proceeds suffer as lottery users move to newer online options. With many of these operational uncertainties and concerns over the state’s overall revenue picture, it will be essential for the Commonwealth to strengthen this important revenue stream for budget writers while insulating existing lottery proceeds from any potential future impacts.

UGGA is the only source of discretionary local aid that cities and towns use to fund foundational services for the residents of Massachusetts, including public safety, public health, public works, senior, youth and veterans services, water and sewer services, solid waste disposal and recycling collection, park and recreation services, libraries, and much more. Local aid funding is needed more than ever, as communities are struggling to balance their budgets and maintain these services. With inflationary pressures and supply chain shortages, communities are faced with costs that are rising much faster than local revenues.

Chapter 70 School Aid
We support funding for Chapter 70 school aid (7061-0008) that matches the promise of the Student Opportunity Act (SOA). Through the SOA, the state committed to investing an additional $1.5 billion in Chapter 70 education aid, intending to reach its goal in fiscal 2027. We applaud the Legislature in maintaining its commitment to funding the SOA on schedule despite the concerns of the pandemic in previous years.

We support funding year four (of six) of the Student Opportunity Act schedule, increasing the Chapter 70 account by $263 million. However, 211 of 318 operating districts (66%) would remain “minimum aid” districts, and would receive new aid of only $30 per student.

Each school district continues to rely on Chapter 70 school aid for existing annual operating expenses. As such, we respectfully request that minimum aid be set so that all districts receive an increase of at least $100 per student in fiscal 2025. Higher minimum aid will be necessary to ensure that no school district or student falls behind. There are 228 districts receiving new aid of less than $100 per student in House 2, with only 90 districts seeing increases of higher than $100 per student. Bringing all districts up to the $100 per student threshold would require an additional $35.4 million, but would make a lasting positive impact in the lives of students in Massachusetts.

Another aspect of Chapter 70 that calls for attention is the very high increase in mandated local contributions in the foundation budget formula. In cities and towns all across Massachusetts, the increase in local contribution required by Chapter 70 is far above the growth in municipal revenues. The result puts a major strain on municipal budgets, regardless of whether they are large beneficiaries of the new SOA rates or minimum aid districts. Without addressing this aspect of the Student Opportunity Act funding challenge, districts with required increases in local contributions that exceed the percentage growth in their own local revenues could be forced to cut funding for essential municipal services, a harmful zero-sum process that would weaken their capacity to deliver critical non-school services to students and families outside the classroom.

One solution would be to limit the growth in required contributions to a community’s municipal revenue growth rate, or to provide “pothole” funding to prevent painful cuts in essential non-school programs.

Special Education “Circuit Breaker”
We support full funding for the special education circuit breaker program (7061-0012), through which the state provides a measure of support for services provided to high-cost special education students. 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. We ask for full funding of the state’s share of eligible educational costs with the schedule included in the Student Opportunity Act, which added transportation expenses as an eligible cost. House 2 would provide $492.2 million for this account and would leverage $75 million that was included in the fiscal year 2023 supplemental budget. We ask you to confirm the full funding requirement using the most recent data available from DESE, and close any funding gap that may result from an updated analysis.

Charter School Impact Mitigation Payments
As a start, we support funding the charter school impact mitigation account (7061-9010) to reimburse school districts at 100%, which fulfills the state’s statutory obligation under the Student Opportunity Act.

The sharp increase in assessments levied on local school districts to pay tuition to charter schools has imposed a major financial burden on cities and towns, a problem made more acute as the state grants more charters and existing charter schools expand. Rising charter school assessments are forcing local public schools to cut programs and services to make up the difference.

Because the great majority of K-12 students attend local public schools, this means that the diversion of Chapter 70 funds to charter schools has a directly negative impact on the vast majority of schoolchildren. Even fully funded, the charter school impact mitigation account is still insufficient to address the deep cuts facing many districts. After receiving mitigation payments, many communities and school districts may still see their charter assessments increase more than their total new Chapter 70 aid. For this reason, we ask that you implement a “circuit breaker” system to prevent any “net negative” situations, so that each community or school district receives a minimum aid increase, after charter payments, based on the number of students remaining in the traditional, non-charter, public school system.

Student Transportation Reimbursements
Funding to assist cities, towns and school districts with the cost of transporting school children is another critical priority, and we respectfully urge full funding of the state’s reimbursement obligations.

Regional Schools: We respectfully urge full funding for transportation reimbursements to regional school districts (7035-0006). House 2 proposes $99.4 million for fiscal 2025 and, according to the Administration, that amount reflects an 80% reimbursement rate. These reimbursements are vital to all regional districts and their member cities and towns, particularly in smaller communities and in more rural parts of the state. We respectfully ask that you increase funding for this key account to reflect higher transportation costs for communities and to move the state to its full reimbursement commitment.

Homeless Students: Under the McKinney-Vento program (7035-0008), municipalities and school districts are providing costly transportation services to bus homeless students to schools outside of the local school district. House 2 would allocate $28.6 million to this program, reflecting a reimbursement rate of approximately 93%. We ask you to confirm the full funding requirement using the most recent data available from DESE, and close any funding gap that may exist, especially in light of the ongoing emergency shelter crisis.

Vocational Schools: In addition, we support funds to reimburse communities for a portion of the cost of transporting students to out-of-district placements in vocational schools (7035-0007), 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. House 2 provides level funding of this line item at $1 million, which represents a 17% reimbursement rate. We respectfully ask that the House and Senate support full funding of this account.

Rural School Aid
The Student Opportunity Act established a special commission to study the long-term fiscal health of rural districts, as the special financial and operational challenges facing rural districts were not addressed in the legislation. The Commission on the Fiscal Health of Rural School Districts issued its report, “A Sustainable Future for Rural Schools,” in July 2022. We support the recommendation in the report to fund the rural schools assistance program (7061-9813) at $60 million. We respectfully ask that you fulfill the recommendation in the Commission’s excellent report.

Payments In Lieu Of Taxes (PILOT)
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) (1233-2400). The House 2 proposal funds this account at $51.8 million. According to the Administration, this amount holds municipalities harmless from recent valuations, but the account essentially remains level funded. We appreciate the progress that has been made on PILOT in recent years and ask that you continue to support this important funding for municipalities and consider the different ways in which municipalities are impacted by state-owned land.

Surtax Funding for Local Roads and Bridges
Last year, the Legislature provided $100 million from surtax revenue for desperately needed investments in supplemental funding to support local roads and bridges (1596-2428). There are more than 30,000 miles of roads under municipal control, which represents nearly 90% of all road miles statewide. This funding is put to use immediately by cities and towns to repair crumbling local roads, advance critically needed projects, and improve safety on our neighborhood roadways. It also complements the important funding provided each year through the Chapter 90 road program.

House 2 proposes a continuation of this investment, recommending $124 million for local roads and bridges, with $24 million dedicated solely to rural communities. However, based on the MMA’s survey, cities and towns still needed approximately $715 million for fiscal 2024 alone to ensure that local roads and bridges are maintained in a state of good repair. Given the loss of purchasing power of existing sources of funding and other local budget pressures, we respectfully request at least $150 million of funding for this incredibly important funding for fiscal 2025. This program provides fundamental support for core municipal infrastructure and will benefit every municipality in the Commonwealth.

Disaster Relief Fund
House 2 establishes a state disaster relief fund, intended to provide relief to cities and towns impacted by extreme weather events. A 2022 study by UMass Boston highlights the likelihood that the intensity of storms and amount of precipitation in Greater Boston and Massachusetts will only increase as the 21st century advances. We strongly support the creation of the Disaster Relief and Resiliency Fund as an important first step in ensuring that municipalities have resources immediately available to help when disaster strikes.

This is a critical time for cities, towns, and local taxpayers. We know that you and your colleagues in the House and Senate continue to be outstanding partners for communities across the Commonwealth, and we look forward to working with you on these key municipal priorities. The critical investments highlighted above will alleviate the local budget pressures being felt in every corner of the state, and protect the essential local services that build our economy and ensure a high quality of life for our residents.

If you have any questions, please do not hesitate to have your office contact me or MMA Deputy Legislative Director Jackie Lavender Bird at at any time.

Thank you very much for your support, dedication and commitment to the cities and towns of Massachusetts.


Adam Chapdelaine
MMA Executive Director and CEO