Legislative local aid hearing coming in March

The Joint Committee on Ways and Means will begin holding public hearings on the fiscal 2026 state budget on March 6, and is expected to hold a hearing focused on municipal and school aid by the end of the month.

The MMA will testify at the local aid hearing to advocate for key municipal and school aid accounts, as follows:

UGGA
The MMA is advocating for an adequate increase in Unrestricted General Government Aid, the state’s revenue-sharing mechanism. The governor’s budget proposal, filed on Jan. 22, would increase UGGA by 2.2%, or $28.8 million to be distributed across 351 cities and towns. The 2.2% aligns with the consensus forecast for non-surtax state revenue growth announced in January.

Chapter 70
The MMA will advocate for continued investment in the state’s K-12 education aid account. The governor’s budget proposal, known as House 1, would continue implementation of the funding schedules in the Student Opportunity Act, bringing Chapter 70 school aid up to $7.3 billion, an increase of $420 million over fiscal 2025.

The governor’s budget proposal would increase per-student minimum new aid from the statutory $30 to $75 for fiscal 2026. With 233 of 318 school districts (73%) being classified as “minimum aid” districts, the MMA will seek to further increase the per-student minimum aid amount for fiscal 2026. In the fiscal 2025 budget, minimum aid provided each district with an increase of at least $104 per pupil.

The MMA will strongly advocate for an increased minimum aid figure to ensure that all districts can at least keep pace with inflation and maintain their school services.

Special education circuit breaker
House 1 would fund the Special Education Circuit Breaker program at $682 million, with $532 million provided in the state budget and $150 million provided in a fiscal 2025 supplemental budget proposal. According to the administration, this represents full funding of out-of-district transportation cost reimbursements, which are provided for in the Student Opportunity Act. The MMA will advocate for fully funding the Special Education Circuit Breaker.

Charter schools
House 1 would fully fund the state’s obligation for charter school mitigation payments at $179 million. The MMA argues, however, that charter schools continue to divert a high percentage of Chapter 70 funds away from many municipally operated school districts, and place increasing strain on the districts that serve the vast majority of public schoolchildren. The MMA will reiterate its call for comprehensive charter school finance reform.

Rural school aid
House 1 would level-fund Rural School Aid at $16 million for eligible towns and regional school districts. The grant program helps districts facing the challenge of declining enrollment to identify ways to form regional school districts or regionalize certain school services to create efficiencies. The MMA will continue to advocate to bring this account closer to the $60 million recommended by the Commission on the Fiscal Health of Rural School Districts in its 2022 report, “A Sustainable Future for Rural Schools.”

School transportation
By leveraging fiscal 2026 surtax funds, House 1 would increase funding for regional transportation reimbursements from $99.4 million in the current fiscal year to $116 million. The administration says its proposal would reimburse districts for approximately 95% of local costs.

Reimbursements for the transportation of out-of-district vocational students would be fully funded at $6.2 million, marking a significant change to this chronically underfunded account.

While House 1 would level-fund reimbursements for the transportation of homeless students under the federal McKinney-Vento Act, at $28.6 million for fiscal 2026, the administration noted that this account could see additional funding through a recently passed Emergency Assistance supplemental budget. The impact of this funding level would vary from community to community, depending on the number of homeless families that are sheltered in local hotels and motels.

The MMA will advocate for fully funding school transportation accounts.

PILOT
House 1 would fund payments-in-lieu-of-taxes at $54.5 million, an increase of $1.5 million. This amount is intended to ensure that no municipality sees a decrease in its overall PILOT payments due to recent valuation changes.

The MMA will continue to advocate for increasing PILOT payments and for the state to conduct a comprehensive review of the ways in which PILOT payments for state-owned land impact municipalities differently.

Road and bridge funding
House 1 reflects the governor’s recent announcement of major investments in transportation statewide. To that end, House 1 would dedicate $765 million of fiscal 2026 Fair Share surtax funding toward the state’s Commonwealth Transportation Fund, to increase bonding capacity by $5 billion.

Using this new bonding capacity, the governor announced that she will seek a five-year, $1.5 billion investment in the Chapter 90 program for local road and bridge maintenance — an annual increase of $100 million. The formula for the additional $100 million would be inclusive of all municipalities, but based on road miles.

The fiscal 2025 supplemental budget bill also includes $25 million for the Winter Resilience Assistance Program.

The MMA will continue to prioritize increased and supplemental local road and bridge funding through various legislative pathways, including the annual and supplemental budgets. In just the past two fiscal years, the Legislature has appropriated $145 million in supplemental road and bridge funding. This funding has immediately been put to use by cities and towns to repair crumbling local roads and improve safety on neighborhood roadways.

Budget process
The MMA will urge legislators to announce an agreement as soon as possible on the two main local aid accounts — UGGA and Chapter 70 — which would be tremendously helpful to the municipal budget-planning process.

The Joint Ways and Means Committee is planning to conclude budget hearings in March. The House is expected to debate its budget bill in April, with the Senate deliberating its own bill in May. The Legislature will work to get a final budget bill to the governor by the beginning of the fiscal year on July 1.