Gov. Baker signs FY22 state budget

On July 16, Gov. Charlie Baker signed the $47.6 billion state budget bill for fiscal 2022, one week after the Legislature sent him a final bill.

Due to better-than-expected tax collections in recent months, the fiscal 2022 budget incorporates an upgraded $34.3 billion tax revenue forecast, an increase of $4.2 billion over the consensus tax revenue estimate that was announced in January.

The budget increases Unrestricted General Government Aid by 3.5%, to $1.168 billion, matching the $39.5 million increase that was included in the governor’s original budget proposal filed in January. The 3.5% increase reflects the policy of increasing general municipal government aid by the same rate as the projected growth in the state tax collections as determined by the consensus revenue forecast.

The budget increases Chapter 70 education aid by $220 million over fiscal 2021, bringing the total to $5.5 billion.

The governor vetoed $7.9 million in gross spending and signed 122 of the budget bill’s 149 outside sections.

While the governor was supportive of the Legislature’s set-aside of a $350 million reserve account for future, anticipated costs associated with the Student Opportunity Act, he wrote that his preference would be to fund the account with surplus revenue from fiscal 2021, rather than the fiscal 2022 budget.

In the charter school reimbursement account, the governor reduced the total by $2.9 million to reflect language included in his original budget bill that was not included in the Legislature’s final budget. The total still covers the intended first year of funding obligated by the Student Opportunity Act.

In outside Section 18, the Legislature sought to permanently increase the maximum number of permissible hours that may be worked by a retired public employee from 960 to 1,200, a proposal strongly supported by the MMA. The governor returned this section with comments allowing the number of permissible hours to increase to 975, with some exceptions in areas of the workforce where a critical shortage exists.

The Division of Local Services has published local aid estimates for cities, towns and regional school districts based on the budget signed by the governor.

The budget forecasts a $1.2 billion deposit in the state’s Stabilization Fund, which would bring the total balance to $5.8 billion, an all-time high.

The state has been operating on a temporary budget since the fiscal year began on July 1.

Chapter 70
The budget funds the “goal rates” originally set forth in the Student Opportunity Act, which established a seven-year schedule that was to begin in fiscal 2021 but was sidelined last year due to the public health emergency. To get back on track, the MMA joined with other education advocates to ask the Legislature to fund Chapter 70 at a Student Opportunity Act implementation rate of one-sixth rather than one-seventh in order to return to the intended schedule. The budget includes a commitment to fund the Student Opportunity Act increases at one-sixth.

The budget does not include the governor’s proposal to allow communities to use a portion of federal Elementary and Secondary School Emergency Relief funds to satisfy any increase in the required local contribution above the fiscal 2021 amount.

Enrollment decline grants
The budget provides $40 million for a one-time, targeted grant program for school districts adversely affected by student enrollment decline during the COVID-19 public health emergency. This account may need to be revisited this fall if actual enrollment levels recover more quickly than anticipated, and the amount needed eclipses the $40 million reserve.

Special Education Circuit Breaker
The budget provides $373 million for the Special Education Circuit Breaker, which reimburses school districts for the high cost of educating students with disabilities. The amount meets the statutorily required 75% reimbursement rate. This reimbursement rate, as well as the inclusion of costs associated with out-of-district transportation, reflects obligations outlined in the Student Opportunity Act.

Charter school mitigation
The budget provides $37 million in additional funds for charter school mitigation payments. The $154.6 million is intended to reimburse school districts at 75%, the rate set forth in year one of the Student Opportunity Act implementation schedule, for costs incurred when students leave to attend charter schools.

Reserve fund for Student Opportunity Act payments
The budget establishes a new $350 million special reserve account to support future funding of the Student Opportunity Act, which is scheduled to fully phase in over the next six years and provide more than $1.5 billion in new education aid.

School transportation
The budget level-funds regional school transportation at $82.1 million, while increasing transportation for homeless students under McKinney-Vento by $1 million over fiscal 2021. Out-of-district vocational transportation is level-funded at $250,000.

Rural school aid
The budget funds rural school aid at $4 million. This is an important account for rural school districts, especially those struggling with declining enrollment.

PILOT
The Payment-in-Lieu-of-Taxes (PILOT) for state-owned land account was increased by $4 million (12.9% over fiscal 2021) to $35 million. The MMA argues that the underfunding of PILOT over the years has created a significant hardship for smaller communities with large amounts of state-owned property.

Shannon grants, cybersecurity and libraries
The budget includes a $1 million increase for the Shannon grants for gang violence prevention and intervention, and funding for the Mass Cybersecurity Innovation Fund, which provides outreach and training programs for municipalities. The accounts for public libraries and regional public libraries would each see an increase of $1 million.

Local housing authorities
An outside section of the budget generally prohibits locally elected executive officers (mainly select board members) from being employed by their local housing authority.