The House and Senate have each approved fiscal 2020 budget bills, with important areas of agreement and with some differences in local government accounts and on policy issues that will have to be resolved by a six-member conference committee.

One area of agreement is a proposal to increase recording fees at the registries of deeds to raise an additional $36 million for the Community Preservation Act Trust Fund. The increase would more than double the base percentage state match, beginning in November 2020, for the 175 cities and towns that have adopted the CPA. Both branches also voted to set aside a portion of any fiscal 2019 year-end surplus to supplement the CPA state match this November.

In a key area of disagreement, House and Senate negotiators will have to reconcile different approaches to updating school spending standards in the Chapter 70 school finance statute and in the different appropriation levels attached to them.

The biggest policy difference for local government, however, is in how charter school mitigation payments would be calculated and funded. The House and Senate budget bills would change current law in ways that significantly impact school aid payments and revenue available for local budgeting purposes. The current method for financing charter schools through Chapter 70 deductions, and the proposals for next year, would result in some districts facing a net loss in school aid.

Both bills have substantial funding for special projects and programs in individual cities and towns.
The Senate wrapped up budget debate on May 23 after working through almost 1,200 proposed amendments over three days of debate. The House version of the budget was approved on April 25. The goal is to get a final spending plan to the governor before the fiscal year begins on July 1.

The House and Senate both voted to fund the main municipal aid account (Unrestricted General Government Aid) at $1.129 billion, the same amount recommended by the governor. The stability of the UGGA number throughout the budget process has helped cities and towns minimize revenue uncertainty and finalize local spending plans on time. Lottery and other gaming revenues cover most of the proposed distribution.

The House and Senate head into conference committee with differences in calculating Chapter 70 local contribution and school aid amounts. In both branches, the Chapter 70 appropriation would cover the basics of the law by ensuring that all districts are able to reach the current “foundation” level of spending and by maintaining hold-harmless rules and providing minimum new aid of $30 per student. Most districts are minimum aid districts.

Beyond the basics, however, both budget bills would continue for a third year to implement the recommendations of the Foundation Budget Review Commission to update the “foundation budget” spending standard as part of the annual budget process. Separate school finance legislation to codify these changes and make them permanent is expected later in the legislative session.

The House and Senate take different approaches to how the factors for school employee benefits (mainly health insurance), special education and English language learners (ELL) are accounted for. The Foundation Budget Review Commission report from 2015 found that the spending standard used by the state significantly underestimated these factors. The governor also proposed to continue updating the “foundation budget” in his budget plan and in separate legislation he filed in January (H. 70). The main difference is that the Senate plan would provide greater weight than do the governor and the House for factors for economically disadvantaged students, particularly in districts with the highest levels of poverty.

The different approaches are reflected in the Chapter 70 appropriations in the House and Senate bills. The impact of these differences on individual municipalities and school districts, if any, can be seen on the preliminary Cherry Sheets posted on the Division of Local Services website.

The House budget would increase Chapter 70 school aid by $218 million to $5.126 billion. The Senate would increase Chapter 70 aid by $268 million.

The Senate budget plan would provide $345 million for the special education “circuit breaker” program, a $16 million increase above the fiscal 2019 appropriation, which is expected to fully fund the state’s statutory share of funding for high cost special education services. This is a vital program that every city, town and school district relies on to fund state-mandated services. The House appropriated $329 million.

The House would increase funding by $23 million to $113 million for the mitigation payments due under charter school law to temporarily reimburse local school districts for a portion of assessments used to pay tuition to charter schools. The Senate appropriated $100 million. Full funding of the current law for fiscal 2020 would require nearly $200 million.

Both the House and Senate would make changes to charter school law, including reducing the six-year mitigation schedule to a three-year schedule, as proposed by the governor.

The House would change how mitigation payments are calculated from a cost-based method tied to growth in assessments to a method based on change in local students attending a charter school. This change was recommended by the governor, but was not included in the Senate bill. It would significantly reduce mitigation payments due to cities and towns.

The House included a new type of mitigation payment, “supplemental assistance,” for districts with high charter school assessment levels compared to school aid amounts. The Senate does not include this provision.

Both branches would increase the facilities payment to charter schools from $893 per student to $938.

The Senate appropriated $75.9 million to reimburse regional school districts for the cost of transporting students, while the House appropriated $73.9 million.

The Senate approved $30 million for the Cherry Sheet Payment-in-Lieu-of-Taxes program, while the House had $28.5 million. Neither branch included language from the fiscal 2018 budget to hold-harmless cities and towns facing a reduction in PILOT payments next year.

For most other local government accounts, the House and Senate appropriated the same or similar amounts.

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