MMA letter to conference committee outlines municipal priorities in FY17 state budget

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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 Todd M. Smola, Ranking House Member
The Honorable Viriato M. deMacedo, Ranking Senate Member
Joint Committee on Ways and Means
State House
Boston, MA
 
Dear Representative Dempsey, Senator Spilka, Representative Kulik, Senator DiDomenico, Representative Smola, and Senator deMacedo:
 
On behalf of cities and towns across the state, we are writing to express our appreciation for the many provisions in the fiscal 2017 budget bills approved by the House and Senate that benefit and support the communities of the Commonwealth. Both bills reflect a commitment to a fiscal partnership with municipalities.
 
We thank the House and Senate for advancing a state budget framework that increases Unrestricted General Government Aid by $42.1 million, a key priority for communities, and funds the essential requirements of Chapter 70 education aid, including increasing per-student minimum aid to $55 per student, increasing funding for the Special Education Circuit Breaker program, and adding funds to the still-underfunded charter school reimbursement account. 
 
While there are a number of areas where the House and Senate are in agreement on funding levels for municipal and school aid accounts, there are many budget provisions where the two branches will have to resolve important differences. In this letter, we offer municipal government’s position on important funding and policy proposals that would impact communities and local taxpayers, and we urgently and respectfully ask you to take action on all of these matters to support the interests of the cities and towns of the Commonwealth.
 
We ask you to please invest in essential municipal and school programs, and we also ask that you protect local government from proposals that would restrict or interfere with their management authority and decision-making powers. One particularly important priority, which we discuss below, is the need to maintain funding for Kindergarten Development Grants, because any significant reduction would more than offset local Chapter 70 school aid gains and create serious budget concerns in 164 communities and school districts. Another critically important issue is the need reject the outside section (amendment #91 to S. 4) that would interfere with local retiree health insurance decisions and lead to increased municipal OPEB liabilities. 

In this letter, we have highlighted the most important and visible budget issues that impact cities and towns:

KEY BUDGET ISSUES CONCERNING SCHOOL AND EDUCATION FUNDING

• Please Support Adequate Chapter 70 Minimum Aid for Municipal & Regional Schools

We support a sufficient funding increase for Chapter 70 school aid [7061-0008] to ensure that all municipal and regional school districts are able to reach the “foundation” level of spending, implement the equity provisions adopted in 2006, and provide an adequate amount of minimum aid that ensures that all schools receive a sufficient increase in fiscal 2017.
 
The House and Senate budget bills are similar in total funding for school aid, but approach the local contribution and aid amounts somewhat differently. We applaud both the House and Senate for increasing minimum aid to $55 per-student from the far-too-low level proposed by the Governor in January. We also appreciate that both the House and Senate budgets have sought to address the problems created by undercounting low-income students. In examining each approach, we support the Senate’s integration of the “fix” into the Chapter 70 calculation, as this would allow school districts to plan on and access the funds at the beginning of the fiscal year, rather than waiting until September or October. We also support the accelerated funding in the Senate budget to close the target share gap.
 
Over the long term, we underscore the importance of implementing the school funding reforms embraced by the Foundation Budget Review Commission (FBRC). This will be the most effective way to address the funding shortfalls in the increasingly obsolete and inadequate foundation budget framework, and we look forward to working with you and your colleagues to implement these needed upgrades to state support for K-12 education. Without the improvements recommended by the FBRC, school budgets will not be able to keep pace with inflation, let alone make the investments needed to maintain quality and enhance student achievement.

• Please Restore Vital Funding for Kindergarten Expansion Grants
 
Cities, towns and regional school districts across the Commonwealth use the important Kindergarten Development Grant program [7030-1002] to support full-day access to local kindergarten programs.  We strongly support the House appropriation of $18.6 million that would maintain funding at the fiscal 2016 level, the same amount proposed by Gov. Baker. Unfortunately, the $2 million appropriation in the Senate budget would be extremely disruptive and harmful to the 164 communities and school districts across the state that rely heavily on this program, as the vast majority of these communities have already adopted their fiscal 2017 budgets, and a last-minute cut of any significance would force mid-year reductions in classrooms and school programs. Please support the $18.6 million appropriation.
 
• Please Increase Funding for Reimbursements for Charter Schools Losses
 
The diversion of Chapter 70 school aid away from local public schools to fund charter schools has placed 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 statutory commitment under section 89 of Chapter 71 of the General Laws to reimburse school districts for a portion of their Chapter 70 aid that is redirected to fund charter schools.

For fiscal 2017, it is estimated that cities and towns will be assessed $537 million in local school revenues to fund charter schools, an amount equal to nearly 12 percent of all Chapter 70 dollars. With assessments at more than a half a billion dollars and growing, it is critical for the state to fund its financial commitment under the law. We support the Senate budget that would fund charter school reimbursements at $90 million [7061-9010], a welcome increase of $9.5 million above the fiscal 2016 level, although full funding of the statutory formula would require $134.4 million.
 
This year’s 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, including some of the state’s poorest and most financially distressed localities. Thus, underfunding the charter school reimbursement formula is harming the most vulnerable, and challenges school districts and communities.
 
• Please Support Funding for Special Education “Circuit Breaker” Reimbursements
 
Municipal officials appreciate that the Legislature has made it a priority to fully fund the special education “circuit breaker” program [7061-0012] that helps cities and towns pay for a portion of high-cost special education services. Both the House and Senate budget proposals intend to fully fund this critical program, an important step because underfunding special education reimbursements would lead to cutbacks in other education programs. The latest information from the Department of Elementary and Secondary Education (DESE) shows that full funding would require a necessary 3.7 percent increase of $10 million to bring funding up to $281.7 million, which is the amount proposed in the Senate budget. We respectfully ask you to adopt the $281.7 million necessary for full funding.
 
• Please Support Funding for Regional School District Student Transportation
 
Funding for transportation reimbursements to regional school districts [7035-0006] is vital to all regional districts and their member cities and towns, particularly in sparsely populated parts of the state. We applaud both branches for adding funds to this key account during the House and Senate budget debates, and support the Senate’s higher appropriation, which would partially fund regional school transportation reimbursements at $61 million. As you know, the state is far below the 100 percent reimbursement that was pledged as an incentive for communities to regionalize, so the $61 million request is quite modest in that context.
 
• Please Support Funding for Out-of-District Vocational Education Student Transportation
 
Chapter 74 of the General Laws commits the state to reimbursing cities and towns for the cost of transporting students to out-of-district vocational education programs. This reimbursement program [7035-0007] 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. We support the Senate budget that would partially fund this account at $1.75 million.

KEY BUDGET AMENDMENTS ON MUNICIPAL AID ACCOUNTS AND MUNICIPAL MANAGEMENT POLICY

• Please Protect Municipal Decision-Making Authority on Health Insurance by REJECTING Senate Provision [Amendment #91 to S. 4]

On behalf of the cities and towns across the state, we Strongly Oppose Amendment #91 to the Senate Budget, which would interfere with local officials’ decision-making authority to act on behalf of their taxpayers on the basic issue of contribution levels for retiree health insurance. This provision would penalize all cities and towns that have used the 2011 municipal health insurance reform law to reduce the cost and financial burden of health insurance for employees, retirees and taxpayers.
 
Specifically, this language would strip these cities and towns of their legal authority to decide whether to adjust contribution percentages for retiree health insurance, by unilaterally extending a freeze in contribution ratios. There was a 3-year freeze in the original consensus reform law, but, unfortunately, two years ago the freeze was extended to 5 years. Now, this provision would seek to extend the freeze to 7 years – an unacceptable imposition on local authority that would have the state interfere with responsible health insurance policy decisions in each community.   
 
Under Chapter 69 of the Acts of 2011 (the 2011 municipal health insurance reform law), any city or town that used sections 22 or 23 of Chapter 32B to implement plan design changes or join the GIC was prohibited from changing retiree health insurance contribution percentages until July 1, 2014. In 2014, the temporary freeze was extended for two more years, until July 1, 2016, for any municipality that adopted or was planning on adopting provisions of the 2011 municipal health insurance reform law.
 
Senate Amendment #91 would reverse planned contribution changes in some cities and towns, and would delay the ability to take action on retiree contribution percentages in many others. Simply put, this outside section would impose significant budget problems in many communities and interfere with sound fiscal planning. The original short-term temporary freeze was part of the compromise brokered by House and Senate leaders in 2011 that led to the enactment of the landmark municipal health insurance reform bill. Repeated extensions of the freeze would undermine that agreement and would clearly undermine the ability of cities and towns to control health insurance costs and save municipal jobs. 
 
Cities and towns are facing a staggering $30 billion unfunded OPEB liability. Senate Amendment #91 would eliminate one of the few tools that communities can use to reduce this burden on local taxpayers. Please reject this ill-timed and ill-conceived provision.
 
• Please Support Funding for the Shannon Anti-Gang Grant Program
 
Please support the Senate appropriation to fund the Shannon anti-gang grant program [8100-0111] at $8 million and help cities and towns respond to and suppress gang-related activities. The Shannon Grant program has been effective, and investment in the program will allow communities to continue their good work.

• Please Support Funding for Summer Jobs for At-Risk Youth
 
Please support the Senate appropriation to fund the youth summer jobs program [7002-0012] at $13.3 million. This funding is critical to providing employment opportunities for at-risk teenagers in our cities and towns, especially with youth unemployment rates climbing.

• Please Support Funding for the Safe and Successful Youth Initiative

Please support the Senate appropriation of $500,000 to fund the Safe and Supportive Youth Initiative [7061-9612]. The program seeks to reduce youth violence through wraparound services for those most likely to be victims or perpetrators, and is vital to violence prevention efforts in dozens of communities.

• Please Support Protection of Municipal Emergency Medical Services

Please support section 89 in the House budget that would prevent the practice of “pay the patient” by insurance companies, which undermines the ability of cities and towns to fund and operate responsive and efficient emergency medical services in Massachusetts. Under “pay the patient,” the insurers pay patients for the cost of their emergency medical ambulance transportation, instead of making direct payment to the community or ambulance service. This forces those communities who operate their own emergency response services to become bill collectors and pursue their own residents or out-of-town and out-of-state individuals to recoup thousands of dollars in ambulance expenses. This is an inefficient process that is subject to abuse.
 
Section 89 would also clarify that municipalities are authorized to set a fair rate for ambulance services. Cities and towns set fees and charges for a wide variety of municipal services, and are very strictly limited by state law to the cost of providing the service. This is the same rule that would apply to rate setting for emergency ambulance services, ensuring that rates are reasonable and preventing insurance companies from shifting costs to local property taxpayers through below-cost reimbursements.
 
• Please Support Double Poles Enforcement
 
Please support the Senate provision [Amendment #80 to S. 4] that would allow cities and towns that pass a local ordinance to enforce the statutory prohibition on keeping double poles up after 90 days. Authorized penalties would be limited to a ceiling of $1,000 per occurrence, and the amendment would only apply to non-commercial and non-industrial approved construction projects. As has been documented by years of public hearings on legislation at the State House, the state’s electric and telecommunications utilities have a demonstrated pattern of ignoring this issue. After years and years of frustration and delay, communities need this tool to compel the elimination of unsightly and unsafe double poles across the state.

• Please Support Funding for Chapter 40S Payments

In line item 1233-2401, we support the Senate level of funding of the Commonwealth’s Chapter 40S commitment to make school cost payments to cities and towns that approve “smart growth” zoning districts under Chapter 40R. The MMA has been a strong supporter of Chapters 40R and 40S as important tools to facilitate locally guided zoning initiatives to increase the supply of affordable and market-rate housing. This program may be small, but it is seen as a reflection of the state’s commitment to joint state-local efforts to develop affordable housing.

• Please Support Low-Income Student Count Provision for MSBA Program

Please support section 76A in the Senate bill that would temporarily require the Massachusetts School Building Assistance [MSBA] program to accommodate the ongoing work to appropriately count low-income students. Without this provision, those communities that would be disadvantaged in Chapter 70 by DESE’s recent change in the method of counting low-income students would also see a decline in their allowable MSBA reimbursement rate, which would greatly increase the local cost of building or rebuilding their schools.

SUMMARY

Again, we would like to express our appreciation to you, and to the leadership and members of the House and Senate, and we respectfully ask you to build on the many favorable local aid investments by supporting the key budget appropriations detailed above, and by opposing the freeze on the health insurance provision [Senate Amendment #91]. 
 
This is a critical time for our economy, and for cities, towns and local taxpayers. Massachusetts is starting to find some new vigor in its economy, yet we can only reach our 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
MMA Executive Director & CEO