MMA letter to the governor identifying municipal priorities in the FY18 state budget

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His Excellency Charles Baker
Governor of the Commonwealth
State House, Boston
 
Dear Governor Baker,
 
On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association is writing with comments on H. 3800, the fiscal 2018 budget bill enacted by the Legislature and sent to you for review and approval. The budget investments in cities and towns and local education programs demonstrate that state leaders are committed to a strong fiscal partnership with local government.
 
Unrestricted Municipal Aid
City and town officials across the Commonwealth appreciate the $1.062 billion appropriation for Cherry Sheet Unrestricted General Government Aid (UGGA) (1233-2350 and section 3) that will help cities and towns balance local budgets in fiscal 2018 and ease reliance on the property tax. The MMA and local officials know that this much-needed increase in unrestricted municipal aid originated with your budget proposal, and we are deeply grateful.
 
Funding for this vital municipal aid program reflects the commitment of Lottery and other gaming revenue to support local government services and avoid over-reliance on the property tax. Nearly all of the Cherry Sheet UGGA distribution for fiscal 2018 would be covered by gaming revenue with very little funded from state tax collections. If Lottery revenue for fiscal 2018 simply reaches the current fiscal 2017 estimate, the tax contribution to UGGA will be less than $10 million. Even at $1.062 billion, the UGGA account will still be $253 million lower than it was 10 years ago.
 
We respectfully ask that you support the full UGGA amount proposed by you and voted by the House and Senate in the conference committee report. This is a high priority for cities and towns.
 
Chapter 70 for Municipal and Regional Schools
We strongly support the $4.747 billion Chapter 70 school aid appropriation (7061-0008 and section 3) included in H. 3800 that would fund the basic requirements of the main school aid program, including the plan to assist cities and towns affected by the change in how low-income students are counted, and the provisions to begin to implement the recommendations of the Foundation Budget Review Commission.
 
We strongly support a funding increase for Chapter 70 school aid that is sufficient to allow all municipal and regional school districts to reach the “foundation” level of spending, implement the target share/down payment aid equity provisions adopted in 2006, and provide an adequate amount of minimum aid that ensures that all schools receive a suitable and appropriate increase in fiscal 2018.
 
A significant majority of school districts only receive minimum aid, which is why the minimum aid aspect of Chapter 70 is so important. Almost three-quarters of all school districts are slated to receive the minimum aid amount as new aid next year. For fiscal 2018, this amount would be $30 per student, which we support.
 
We strongly support the House and Senate provisions to build on the steps taken by you in House One to begin implementing the recommendations of the Foundation Budget Review Commission, to update the Chapter 70 “foundation budget” minimum spending standards for special education and health insurance costs for school employees. These recommendations, approved in June 2015 and October 2015 by the Commission, would update the increasingly obsolete foundation budget and restore some measure of credibility to the standard developed as part of the landmark education reform law of 1993. We look forward to full implementation of the Commission recommendations as soon as possible.
 
Special Education “Circuit Breaker”
We support full funding of the Special Education “Circuit Breaker” Program (7061-0012), through which the state provides a measure of support for services provided to high-cost special education students. The H. 3800 appropriation falls short of this goal, and we ask that full funding be achieved during the course of the year through a supplemental appropriation. We ask that you approve the $281 million included in H. 3800 as a starting point for the year.
 
Under Chapter 71B of the General Laws, the state’s share is 75 percent of costs that exceed four times the state average per pupil foundation budget. This is an essential program that provides critical funding to assist all school districts with the increasingly burdensome and volatile cost of complex and expensive special education services.
 
Cities and towns are providing special education services under a mandate imposed by state government, and communities recognize the importance of these services to the schoolchildren who rely on these programs to achieve their maximum educational potential, which is why cities, towns and school districts are committed to meeting their obligations as mandated by the state. The Circuit Breaker formula is intended to partially fund the state mandate.
 
Reimbursements for Charter School Losses
The rapidly growing deduction of Chapter 70 school aid from local public schools to support charter schools has become a major financial drain 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 the law to reimburse school districts for a portion of their school aid lost when used to fund charter schools.
 
The H. 3800 appropriation falls far short of full funding, and we hope that full funding can be achieved later this year through a supplemental appropriation. We ask that you approve the $80.5 million included in H. 3800 as a starting point for the year.
 
For fiscal 2018, it is estimated that cities and towns will be assessed $598 million in local school revenues to fund charter schools, an increase of $65 million (12 percent) above the estimated level this year. With assessments at over half a billion dollars and growing, it is critical for the state to fund its financial commitment under the state statute. Full funding of the statutory formula would require $157 million, based on the most recent data from the Department of Elementary and Secondary Education (DESE). Without these funds, cities and towns will face another round of lost school aid next year, resulting in fewer programs for the vast majority of students who remain in the local public school setting.
 
These school aid deductions are impacting a large number of communities, including some the state’s poorest and most financially distressed cities and towns. Underfunding the charter school reimbursement formula harms the most vulnerable and challenged school districts and communities.
 
Regional School District Student Transportation Reimbursements
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. Underfunding this account has presented serious budget challenges for these districts, taking valuable dollars from the classroom. Full funding next year would require $86 million, according to DESE. We support the $61.5 million appropriation that is before you.
 
McKinney-Vento Homeless Student Transportation Costs
The State Auditor has ruled that the McKinney-Vento program is an unfunded mandate on cities and towns. Under the program, municipalities and school districts are providing very costly transportation services to bus homeless students to schools outside of the local school district. The Legislature has appropriated $8.1 million (7035-0008), which we ask you to support. According to the most recent DESE projection, full funding of the mandate would require almost $24 million in fiscal 2018. We know that your long-term priority and focus is on reducing the number of homeless families in hotels and motels, which is the ultimate solution. In the meantime, though, the $8.1 million will present ongoing financial challenges in impacted communities.
 
Out-of-District Vocational Education Student Transportation
Chapter 74 of the General Laws requires the state to reimburse cities and towns for the cost of transporting students to out-of-district vocational education programs (7035-0007). This reimbursement program 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 may not be available locally. DESE estimates that full funding of the state's obligation next year would require $3.6 million. The H. 3800 appropriation would provide $250,000 in funding for this account.
 
Shannon Anti-Gang Grants
Please support the H. 3800 level of funding for the highly effective and valuable Shannon Anti-Gang Grant Program (8100-0111), which has helped cities and towns respond to and suppress gang-related activities. The $6 million appropriation simply level funds the program.
 
Municipal Modernization Act Update
Please support outside section 31, which would update an important section of the Municipal Modernization Act that became law last August. The provision would change the rules governing the municipal overlay account that is used to cover property tax abatements. The change would allow any interest amount due to a taxpayer to be paid from the overlay account.
 
Community Benefit Districts
Please support outside section 30, which would grant municipalities the local option to create Community Benefit Districts (CBDs). With this CBD proposal, local property owners would have the option to assess themselves a small fee to implement a management plan for the district. This would not replace or privatize public services, but would instead provide the opportunity for new services not ordinarily provided by the municipality. The property owners, municipality, and the community at-large would oversee implementation through a nonprofit management organization, and would have the option to dissolve the entity.
 
Water Infrastructure Funding
Please support language included in item 1599-0093 that would make an important technical change to the appropriation language for contract assistance to the Massachusetts Clean Water Trust. This provision would bring the budget language into conformity with the 2014 Water Infrastructure Act and more recent regulations to allow use of funds beyond only debt service, to include principal forgiveness, interest rate reduction and other means of financial assistance. Upgrading our water infrastructure in the Commonwealth is essential not only for the environment, but also for protecting public health and promoting economic development.
 
Summary
This is a critical time for our economy, and for cities, towns and local taxpayers. We thank you for your efforts to advance a strong state budget plan that invests in our communities, and we thank you for your remarkable leadership in promoting a powerful state-local partnership.
 
The Massachusetts economy will only maintain healthy statewide growth and job creation if all 351 cities and towns have the resources to adequately serve the residents and businesses of the Commonwealth. This is why we respectfully ask that you approve the local aid investments detailed above, and support policies to protect municipal authority and resources.
 
Please do not hesitate to have your office contact us at any time if you have any questions or need additional information.
 
Again, 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
 
cc: The Honorable Karyn Polito, Lieutenant Governor of the Commonwealth
Secretary Kristen Lepore, Executive Office for Administration and Finance
Senior Deputy Commissioner Sean Cronin, Division of Local Services