Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
The Honorable Brian S. Dempsey, House Chair
The Honorable Karen E. Spilka, Senate Chair
The Honorable Stephen Kulik, House Vice Chair
The Honorable Sal N. DiDomenico, Senate Vice Chair
The Honorable Benjamin Swan, House Assistant Vice Chair
The Honorable Patricia Jehlen, Senate Assistant Vice Chair
Joint Committee on Ways and Means
State House, Boston
Dear Representative Dempsey, Senator Spilka, and Distinguished Members of the House and Senate Committees on Ways and Means:
On behalf of cities and towns in every corner of the Commonwealth, the Massachusetts Municipal Association is writing to support important funding and investment in key municipal and school aid programs in the fiscal 2016 state budget bill that you and your colleagues in the House and Senate will consider in the coming weeks.
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.
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 the $34 million increase in the Unrestricted General Government Aid (UGGA) account included in House 1, the fiscal 2016 budget submitted by the Governor on March 4, and ask you to embrace this increase in your budget recommendations. The UGGA account is currently funded at $945.75 million, and the 3.6 percent increase included in the Governor’s budget is certainly achievable, as the increase is lower than the consensus revenue forecast of 4.8 percent growth in state tax revenues.
Beginning in fiscal year 2016, it is forecast that the Commonwealth will receive gaming revenues from the Plainridge Park Casino facility of between $86.7 million to $118.5 million. These funds are required by law to flow directly into the Gaming Local Aid Fund for the primary purpose of funding Unrestricted General Government Aid. This is more than enough to fund the full $34 million increase requested.
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
Fiscal 2016 (House 1): $979,797,001
In the long-term, we urge you to support a revenue sharing framework linking UGGA funding to the growth in state tax revenues. This 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. The Governor’s budget begins this process by providing 75 percent of the growth rate, or an increase of $34,047,001.
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 2015, which we believe should be at least $100 per student.
Most 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.
The Governor has proposed a fiscal 2016 Chapter 70 increase of $105.3 million, which includes minimum aid of only $20 per student for 245 cities, towns and school districts, an insufficient amount to maintain current school staffing and services. Recognizing that the Foundation Budget Review Commission will not file its report until mid-2015, far past the deadline for inclusion in the fiscal 2016 state budget, 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 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 was intended to fully fund the state’s full statutory reimbursement obligation this year. However, the overall appropriation was reduced down to $253.4 million by the November and February 9C cuts, and after earmarks and DESE administrative costs, it is our understanding that the final fiscal 2015 amount set for distribution to cities and towns will fall $4.8 million short, for a 73 percent reimbursement.
The Governor’s budget would level-fund the Special Education Circuit Breaker program at the post-9C level of $253.4 million. Because special education costs are expected to rise in fiscal 2016, this means that the Governor’s budget likely underfunds reimbursements by at least several million dollars. DESE’s preliminary calculation projects that cities and towns should receive reimbursements totaling $257.9 million in fiscal 2016. We ask you to add the funds necessary to keep pace with inflation and fully fund the program next year, in addition to earmarks and administrative costs.
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. If the Circuit Breaker program is underfunded, this will force cuts to other areas of local school budgets and services.
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 $444 million to fund charter schools, 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 original $80 million appropriation in the fiscal 2015 general appropriations act was $30.5 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 $33.6 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.
The Governor’s fiscal 2016 budget would level fund charter school reimbursements at $76.86 million, even though local payments to charter schools are expected to increase by $55 million. Full funding of the statutory formula would require $130.4 million. Without these funds, cities and towns will face another major shortfall next year, and result in cutbacks for the vast majority of students who remain in the traditional public school setting.
We continue to call on the Commonwealth to close this year’s $33.6 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 three aspects to this important budget priority: 1) reimbursements to regional districts; 2) the transportation of homeless students under the McKinney-Vento program; and 3) transporting out-of-district vocational students. 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. We applaud you and your colleagues in the Legislature for appropriating $70.25 million for fiscal 2015, but, unfortunately, Governor Patrick used his 9C powers to cut the amount in November by 27 percent, an unexpected $18.7 million loss, returning the program to fiscal 2014 levels just months after you 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. Governor Baker’s budget proposal would simply level-fund regional school transportation reimbursements at $51.5 million, dropping the reimbursement percentage down to 61 percent. We respectfully ask that, at a minimum, the Legislature restore the $18.7 million mid-year cut and return the program to the Legislature’s original fiscal 2015 appropriation.
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 $19.8 million, but the Commonwealth level-funded the program at $7.35 million, creating a shortfall of $12.45 million in the current fiscal year.
House 1 proposes a $1 million increase, to bring funding for McKinney-Vento reimbursements up to $8.35 million. We respectfully ask the Legislature to fully fund this state mandate, which would require $20.8 million, according to the most recent DESE projection.
3) The fiscal 2015 state budget included $2.25 million item to reimburse communities for a portion of the $3.8 million 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. Governor Patrick eliminated all funding with his November 9C cuts, a painful mid-year loss, and House 1 includes no funding at all. We respectfully ask that you restore this funding in your fiscal 2016 budget act. According to DESE, full funding would cost $3.9 million.
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). 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 at $26.77 million in fiscal 2015, and it is still below the $28.3 million funding level provided in fiscal 2008. Many of our state’s smallest communities are heavily reliant on PILOT payments, and shortfalls in this account have a significant impact on their ability to deliver basic municipal services. House 1 would level fund PILOT at $26.77 million, and we respectfully ask the Legislature to at least return to the $28.3 amount provided in fiscal 2008, a $1.5 million increase.
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.
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 legislative leaders secure an agreement on the $34 million increase in 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, ideally including a minimum aid increase of $100 per student. An agreement would set the stage for a consensus Local Aid Resolution and a commitment to minimum municipal and school aid amounts during April. 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 respectfully ask that you adopt the local aid investments and targeted funding detailed above. Massachusetts is starting to find some new vigor in its economy. But 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 and businesses of the Commonwealth.
Please contact us at any time if you have any questions or need additional information by having your office reach out to me or MMA Legislative Director John Robertson at (617) 426-7272, ext. 122, or jrobertson@mma.org.
Thank you very much for your support, dedication and commitment to the cities and towns of Massachusetts.
Sincerely,
Geoffrey C. Beckwith
Executive Director, MMA