Senate budget bill would lift key local aid accounts

The Senate Committee on Ways and Means today released a state budget proposal for fiscal 2023 that would double the increase in unrestricted local aid over what was proposed by the governor in January and approved by the House last month.

The $49.6 billion Senate Ways and Means proposal, which is scheduled to be taken up by the full Senate later this month, would increase Unrestricted General Government Aid by 5.4%, or $63 million, to $1.23 billion.

Senate leaders are also proposing significant increases for Chapter 70 education aid, charter school reimbursements, the Special Education Circuit Breaker account, and payments in lieu of taxes for state-owned land.

With state tax collections continuing to outpace benchmarks by a wide margin, including a record-setting April, the Senate plan (S. 4) represents an increase of $2.07 billion over the budget for the current fiscal year.

Senate members must file budget amendments by 1 p.m. on Friday, and the Senate is scheduled to begin its budget debate on May 24. The Senate typically considers hundreds of amendments during its budget debate week.

The Division of Local Services will be posting preliminary Cherry Sheet numbers for cities, towns and regional school districts based on the Senate Ways and Means budget proposal shortly.

UGGA
For several months, the MMA has been advocating for an increase in Unrestricted General Government Aid that better reflects the state’s robust tax collections and allows communities to address budget challenges caused by high inflation and the constraints of Proposition 2½. The Senate budget committee has addressed this concern, a move hailed by the MMA and local officials statewide.

At a briefing to unveil the bill, Senate Ways and Means Chair Michael Rodrigues said, “Because of the fact that we have seen some robust revenues over the last year or so, we wanted to ensure that we share those with our local communities, many of whom are struggling at their level.”

Chapter 70
The Senate budget proposal would increase Chapter 70 education aid by $494.9 million over the current fiscal year, for a total of $5.99 billion. The funding level would continue to fund the Student Opportunity Act on the intended schedule.

In recognition of the challenges faced by 135 school districts due to receive only minimum new aid, the Senate proposal would double the per-pupil minimum aid amount from $30 per student to $60, matching the House-adopted budget. (The governor’s budget had proposed $30.)

The House included the additional $30 per student in minimum aid in a separate line item, while the Senate bill includes the increase in the Chapter 70 line item, which is why a comparison of House and Senate Ways and Means preliminary Cherry Sheets will show different numbers. (The Senate’s full minimum aid number will be on the Cherry Sheet, while the House’s additional $30-per-student will not.) This is just a presentation issue, as both versions would ultimately provide the same boost for all districts.

Charter schools
The Senate Ways and Means Committee is proposing a total of $243 million for charter school mitigation payments, which represents an increase of $89.2 million over the current fiscal year and $24.4 million more than the governor proposed. Matching the House-approved budget, the Senate plan would fully fund the state’s statutory obligation for charter school mitigation payments as outlined in the Student Opportunity Act, pushing the state to phase in the plan by fiscal 2023, a full year earlier than the governor’s budget proposal would.

Special Education Circuit Breaker
The Senate Ways and Means proposal includes $435 million for the Special Education Circuit Breaker account, a $62 million increase over fiscal 2022.

The Student Opportunity Act expanded the circuit breaker by including costs associated with out-of-district transportation, to be phased in over several years. The House-passed budget accelerated the transportation component, and includes $5 million more, for a total of $440 million. Recent estimates indicate that the full funding amount for fiscal 2023 could be as high as $460 million.

The governor originally proposed $414 million for this account, and Senate and House leaders are clearly working to address shortfalls with added funding.

School transportation
The Senate Ways and Means budget would return the Regional School Transportation account to $82.2 million, the same amount as the current fiscal year, for an 85% reimbursement rate, providing $5 million more than the governor’s budget recommendation and the House bill, which would provide 80% of full funding. The MMA will be working with legislators to address this priority account.

The Senate bill would also level-fund out-of-district vocational transportation at $250,000. The governor’s and House-approved budgets did not include funding for out-of-district vocational transportation.

The Senate bill would increase transportation for homeless students under the McKinney-Vento program by $7 million over fiscal 2022 to $21.5 million, matching the full funding commitment in the House and governor’s budgets.

PILOT
Recognizing the importance of Payments-in-Lieu-of-Taxes for state-owned land, the Senate Ways and Means Committee proposes to increase the line item to $45 million — a $10 million increase over fiscal 2022.

The governor’s and House’s budget would level-fund PILOT at $35 million.

Shortfalls in PILOT funding have created significant challenges for smaller towns and cities with large amounts of state-owned property. The Senate budget committee’s 29% increase would provide a huge boost to these communities.

Stabilization fund
The Senate Ways and Means plan would boost the balance of the state’s stabilization — or “rainy day” — fund to $6.74 billion by the end of fiscal 2023. The House-approved budget would raise the balance to $6.55 billion.

Local response
“It is clear that Senate leaders are prioritizing a strong state and local government partnership,” said MMA Executive Director Geoff Beckwith. “We know local officials deeply appreciate the proposed $63 million increase in Unrestricted General Government Aid, which is critical for municipalities to continue to provide essential services to residents across the Commonwealth.

“Bringing the per pupil minimum aid increase from $30 to $60 is good news to the 42% of school districts that are minimum aid districts. We also appreciate the progress made in this spending proposal to address the impact of charter school tuition on municipal and regional school districts, as well as the significant investment in PILOT.”

During the budget debate and the remainder of the legislative session, the MMA will work to build on the Senate budget committee proposal by advocating for further increases in key accounts.