Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
Amid growing fiscal concerns, Gov. Maura Healey on July 4 signed the $60.9 billion state spending plan for fiscal 2026 after vetoing $130 million in planned spending, including roughly $20 million from charter school reimbursement funding.
The final budget increased by $3.2 billion over fiscal 2025, but is $1 billion smaller than the proposal the governor had filed in January. The spending plan was developed during a period of uncertainty about future economic conditions, particularly as federal policy actions and spending decisions loom large. As she signed the budget, Healey announced that an executive branch hiring freeze, implemented in May, will run through the end of fiscal 2026.
The budget law includes several key investments for municipalities, including a significant boost to minimum per-pupil education aid, school transportation funding, continuance of Rural School Aid, and a 1.1% increase for Unrestricted General Government Aid.
The House and Senate took their budget votes on June 30, a day after the compromise bill (H. 4240) was released by a House-Senate conference committee. Fiscal 2026 began on July 1, and an interim budget was passed and signed to be in effect until the governor signed the full fiscal 2026 budget.
The Division of Local Services has posted preliminary Cherry Sheet estimates for each city, town and school district based on the Legislature’s budget. The Department of Elementary and Secondary Education website has details about Chapter 70 and other school finance-related initiatives.
Here’s a review of key municipal budget issues:
UGGA: The budget law increases Unrestricted General Government Aid by $14 million, a 1.1% increase over fiscal 2025. The appropriation represents a compromise between the House’s proposed level-funding and the Senate’s proposed 2.2% increase. This discretionary local aid account helps cities and towns deliver vital services.
Chapter 70: The budget increases Chapter 70 education aid by $497 million, continuing implementation of the funding schedules in the 2019 Student Opportunity Act while increasing minimum new aid from $30 per student to $150 for fiscal 2026. Three-quarters of school districts — 245 out of 318 — would benefit from the minimum aid increase.
Charter schools: The Legislature’s budget included $199 million for the charter school reimbursement account, which would have covered 100% of the state’s statutory obligation to mitigate Chapter 70 losses to charter schools. The governor, however, vetoed $19.9 million from this account, aligning with her initial budget recommendation, to accommodate “historic fluctuations in enrollment.” The MMA will be asking the Legislature to override this veto.
Special Education Circuit Breaker: The Special Education Circuit Breaker is funded at $485 million in the state budget, to go along with $190 million from the recently signed surplus surtax supplemental budget, for a total of $675 million in fiscal 2026. These investments are expected to meet the state’s obligation for this account.
School transportation: The budget includes a total of $103.7 million for two accounts to support school transportation costs: $53.7 million for regional school transportation, and $50 million to support both regional school and out-of-district vocational transportation (historically funded separately through line item 7035-0007). In addition, $8.1 million was included in the recent surplus surtax supplemental budget to support fiscal 2026 regional school transportation needs. In fiscal 2025, regional school transportation was funded at $99.5 million, and out-of-district vocational transportation was funded at $1 million.
Rural school aid: The budget bill funds Rural School Aid at $12 million for eligible towns and regional school districts. The grant program helps districts facing the challenge of declining enrollment to identify ways to form regional school districts or regionalize certain school services to create efficiencies.
McKinney-Vento: Reimbursements for the transportation of homeless students under McKinney-Vento is funded at $28.6 million for fiscal 2026. According to updated cost projections from the Department of Elementary and Secondary Education, the Legislature’s proposal represents 58% of anticipated claims for fiscal 2026.
Universal school meals: The budget includes $180 million for the Universal School Meals program, which allows all Massachusetts students to eat for free at school, regardless of household income.
Green School Works: The budget includes $10 million to fund the Green School Works grant program, which was established in fiscal 2024 to provide financial support to public school districts to install or maintain clean energy infrastructure.
PILOT: Payments-in-lieu-of-taxes for state-owned land is funded at $54.5 million, an increase of $1.5 million from last year. This amount is expected to hold communities harmless from recent valuations.
Policy provisions
The budget includes outside sections with the following policy provisions:
Chapter 70 local contribution study: The budget law directs the Department of Elementary and Secondary Education to study the formula for determining a municipality’s required local contribution under Chapter 70. A report is due by June 30, 2026.
Disaster relief: The budget law directs the state comptroller to transfer $14 million from any consolidated net budget surplus from fiscal 2025 to the state’s Disaster Relief and Resiliency Fund. The MMA strongly advocated for the creation of this fund, which will support rapid-response efforts by cities and towns as they incur emergency response costs from extreme weather.
Alcohol license transfers: The budget includes a provision allowing, at local option, any onsite consumption licensee currently selling wine and malt beverages to trade its license in for a license to sell all alcoholic beverages.
Affordable housing exemption: The budget law requires the administration to study the feasibility and impact of allowing a local-option municipal property tax exemption for new affordable housing developments. A report is due by March 1, 2026.
Not included: The budget law did not include several proposed policy initiatives, including a proposal for “MassHealth Crossover” payments that would have jeopardized financial relief for emergency medical services transporting patients eligible for both Medicare and MassHealth; reforms to the municipal liquor license quota system; and a review of the Massachusetts School Building Authority’s capacity to meet the needs of current and future school facility projects.
Fair Share
Fiscal 2026 is the third year for allocating revenue from the Fair Share surtax on annual incomes over $1 million. The budget law will use $2.4 billion from this revenue stream, more than $400 million more than in previous years. This revenue — which can be used only for transportation and education programs — will support several key accounts and initiatives important to cities and towns in fiscal 2026, including:
• $550 million for the Commonwealth Transportation Fund to expand the state’s bonding capacity for various transportation needs and projects
• $497 million to support increases to Chapter 70 education aid
• $180 million to fund reimbursements for Universal School Meals
• $50 million for various school transportation needs
• $10 million for the Green School Works program