Local aid is more than UGGA and Ch. 70

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From The Beacon, February 2015

Last month’s Annual Meeting was an excellent opportunity for Gov. Charlie Baker and his team to underscore their commitment to a powerful state-local partnership – and the governor certainly took full advantage. Both he and Lt. Gov. Karyn Polito pledged to protect municipal and school aid from taking any hits to close the state’s massive $765 million mid-year budget deficit, and repeatedly stated that their administration would work closely with communities in every corner of the state to foster economic growth and success.

The 1,100-plus municipal officials who crowded into the MMA conference greeted the news with enthusiasm and optimism. With unrestricted municipal aid nearly $400 million below 2008 levels, and several years of below-inflation school aid increases, communities are thirsting for a fiscal partnership that safeguards and delivers the resources necessary to provide essential services to the residents of Massachusetts, services that are needed to build our economy.

With the governor set to announce his package of proposals to close the fiscal 2015 mid-year deficit in early February, and filing his fiscal 2016 state budget proposal by March 4, municipal leaders will not have to wait long to learn how state officials will address their fiscal woes without shifting the problems down to cities and towns.

Last November, when outgoing Gov. Deval Patrick disclosed the existence of a mid-year budget deficit (at a much smaller size), he claimed that he was protecting education funding. But municipal and school leaders knew the reality: Chapter 70 was not touched, but Patrick’s “9C” budget cuts slashed nearly $32 million from education funding that goes directly to communities and school districts. This included $21 million from regional and vocational school transportation, almost $4 million from special education circuit-breaker reimbursements, and millions more from a variety of accounts, including charter school reimbursements, Chapter 70 hardship reserve funds, extended learning time and kindergarten grants, METCO, and other programs.

These cuts are real, and they are forcing communities to impose disruptive reductions in local school programming and finances – in the middle of the year. In particular, the 9C cuts hit smaller communities hard because they are particularly reliant on promised funding levels for regional school transportation.

It is notable that the governor’s 9C authority to impose cuts unilaterally does not include Chapter 70 or Unrestricted General Government Aid (UGGA). Mid-year reductions to those accounts must receive approval from the Legislature. Gov. Patrick did file legislation to impose a $25.5 million cut to UGGA funding and, thankfully, House and Senate leaders immediately announced their opposition.

However, the events in November raise an interesting point – because of the way that the Patrick administration framed the issue, members of the general public, and even many in the media, believe that local education funding was protected, which is simply not accurate. The fact is that the state imposed more than $32 million in mid-year cuts to local education programs, and cut nearly $10 million from other programs that support municipal services and initiatives.

Cities, towns and school districts certainly rely on unrestricted municipal aid and Chapter 70 for the majority of their local aid. Yet there are a large number of key reimbursement accounts in the state budget that also fund local schools and municipal budgets. Most of these budget items are necessary to reimburse communities for state mandates, including special education, transportation of homeless students, transportation of students in regional schools, and reductions in Chapter 70 aid due to state-established charter schools.

Since communities cannot reduce their funding for state-mandated programs, when these accounts are cut or underfunded, local officials are then forced to cut other school and municipal services to make up the difference. The results are painful and destabilizing, especially in the middle of a fiscal year.

The MMA looks forward to working closely with Gov. Baker, Lt. Gov. Polito, and members of the Legislature to make sure that the state’s fiscal 2015 problems, which the governor says stem from overspending and problems with the state’s botched health care website, rather than constricting state revenues, do not further impact cities and towns.

This means protecting and funding UGGA, Chapter 70, and the funds owed to communities to pay for mandated programs and state-required initiatives. Communities use all of these accounts to fund the full range of municipal and school services, and cutting any one of these lines in the state budget has a negative impact on education, public safety, road maintenance, parks, emergency response, libraries and much more.

In short, local aid includes a lot more than unrestricted municipal aid and Chapter 70. And a powerful and robust state-local fiscal partnership will recognize this reality.