Baker’s FY22 budget would boost municipal aid by 3.5%, Ch. 70 by 3.7%

The $45.6 billion state budget plan for fiscal 2022 that Gov. Charlie Baker submitted to the Legislature today would reduce overall state expenditures by nearly 1% next year, as the administration plans a recovery from the disruptions caused by the ongoing COVID-19 pandemic and the related economic recession.

Similar to the state budget for fiscal 2021, the spending plan for next year, known as House 1, relies on as much as $1.6 billion in one-time revenues from the state’s Stabilization Fund.

Unrestricted General Government Aid
Fulfilling his long-term pledge to local officials, Gov. Baker’s budget would increase Unrestricted General Government Aid at the same rate as the projected growth of state revenues: 3.5%. The increase amounts to $39.5 million, bringing the account to nearly $1.17 billion. Implementation of this state-local revenue sharing framework is good news in a challenging time for local finances.

• Visit Division of Local Services website for preliminary fiscal 2022 Cherry Sheet aid amounts for each community

Chapter 70
The governor’s budget recommendation would restart implementation of the funding schedules in the 2019 Student Opportunity Act that were delayed last year after the coronavirus recession upset the original first-year funding plan.

His budget would increase Chapter 70 education aid by $197.7 million (3.7%) to a total of $5.48 billion, which would fully fund the first year of the Student Opportunity Act’s seven-year plan to add $1.5 billion in new state funding for K-12 education. The majority of the funds would implement the improvements to the foundation budget, adding weight for low-income students, English Language Learners, special education costs, and school employee health benefits.

An initial look at the budget, however, indicates that a large percentage of cities, towns and school districts would remain minimum-aid-only, receiving the minimum $30 per-student increase in the act. The MMA will continue to strongly advocate for significantly higher minimum aid during the budget process.

The Chapter 70 recommendation would make a significant change in how cities and towns can meet their required local contributions for fiscal 2022. Municipalities may use up to 75% of the total grant awarded to the local school district through the Elementary and Secondary Education Emergency Relief program enacted by Congress last month (also known as ESSER II) to fund a part of the increase in its local contribution requirement under Chapter 70, but not more than the increase in required local contribution in fiscal 2022 relative to fiscal 2021. This is a new temporary provision that is explained in the narrative and slides on the Department of Elementary and Secondary Education school finance website.

• Visit DESE website for fiscal 2022 Chapter 70 aid and net school spending requirements under the governor’s budget for each city, town and regional school district, as well as preliminary fiscal 2022 charter school assessments and reimbursements

Charter schools
The governor’s budget would increase the charter school reimbursement account to $143.5 million, intended to meet the commitment in the Student Opportunity Act to fund 75% of the state’s statutory obligation to mitigate Chapter 70 losses to charter schools.

The Student Opportunity Act pledges to phase in full funding of the statutory reimbursement formula over three years, and while this plan may meet that requirement, the MMA contends that it would not fix the serious flaws in the charter school finance system. Charter schools will continue to divert a high percentage of Chapter 70 funds away from many municipally operated school districts, and place greater strain on the districts that serve the vast majority of public schoolchildren. A resolution of the charter school funding problem remains a top MMA priority.

Special Education Circuit Breaker
House 1 would add $22.5 million to fund the Special Education Circuit Breaker program at $367.7 million, an increase of 6.5%. The Student Opportunity Act expanded the circuit breaker by including out-of-district transportation, an important enhancement for cities and towns.

Regional school transportation reimbursements
The governor’s budget would reduce funding for regional transportation reimbursements from $82.2 million this year to $75.9 million. The MMA notes that this would create hardship for virtually all communities in regional districts.

Reimbursements for transportation of out-of-district vocational students remains significantly underfunded at $250,000.

Increasing these accounts is an MMA priority.

McKinney-Vento
House 1 would reduce reimbursements for the transportation of homeless students under the federal McKinney-Vento Act, from $13.5 million this year to $11.1 million in fiscal 2022. The impact of this funding level will vary from community to community, depending on the number of homeless families that remain sheltered in local hotels and motels.

The administration has been successful in reducing the number of homeless students who are dislocated from their original district, but communities that continue to provide transportation to many students may continue to see shortfalls.

PILOT
The governor’s budget would level-fund payments-in-lieu-of-taxes at $31 million, which the MMA argues would be a significant hardship for many smaller, rural communities with large amounts of state-owned land. This is a key account due to the major impact that PILOT payments have on budgets in a number of small communities.