Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
His Excellency Deval Patrick
Governor of the Commonwealth
State House, Boston
Dear Governor Patrick:
On behalf of cities and towns in every corner of the Commonwealth, the Massachusetts Municipal Association is writing to support important funding and investments in key municipal and school aid programs in H. 4242, the fiscal 2015 state budget bill that is awaiting your signature.
The MMA and city and town officials across the state deeply appreciate the abiding partnership that you have forged with the communities of Massachusetts. It is clear that support for local government and municipal services continues to be a high priority for you and the entire Legislature. The MMA and our members are grateful for your leadership.
A strong and enduring partnership between cities and towns and state government is essential to a healthy and expanding economy and to the ability of local government to provide world-class education and municipal services, ensure safe streets and neighborhoods, and maintain local roads and vital infrastructure. This is fundamental to our state’s economic success and competitiveness.
The lasting impact of the Great Recession has challenged cities and towns greatly. Communities have eliminated 15,000 jobs and, despite a tightly capped property tax due to Proposition 2½, municipalities are more reliant on the property tax to fund essential services than at any time in the past 30 years. Adequate funding for municipal and education aid is necessary in order for cities and towns to provide the basic local and school services that the residents of Massachusetts deserve and expect, and to mitigate today’s overreliance on the most regressive of the major revenue sources in the state, the property tax.
UNRESTRICTED GENERAL GOVERNMENT AID (UGGA)
We applaud the Legislature for adopting a local aid resolution and budget plan that embraces a $25.5 million increase in Unrestricted General Government Aid in fiscal 2015 (Section 3 and line item 1233-2350), and respectfully ask you to approve this vitally necessary increase in municipal aid. As you know, cities and towns have responsibly incorporated these funds into their budgets in order to fund essential municipal and school services, based on the March notification from the Legislature that these funds would be appropriated in the state’s general appropriations act.
CHAPTER 70 SCHOOL AID
Regarding Chapter 70 education aid, the budget enacted by the Legislature matches the funding plan in H. 2, the budget you recommended in January, providing an overall increase of $99.5 million, with most cities, towns and school districts receiving minimum aid increases of $25 per student (Section 3 and line item 7061-0008). This increase will allow municipal and regional school districts to reach the “foundation” level of spending and phase in a portion of the target share/down payment aid equity provisions adopted in 2006.
We note that a significant majority of school districts would only receive minimum aid. At $25 per student, most stakeholders recognize that minimum aid is not adequate to allow cities and towns to maintain existing school programming into the future. We strongly recommend that minimum aid amounts increase in subsequent years, otherwise minimum aid cities, towns and school districts will need to reduce their education services or divert more funds from the municipal side of the budget. This is why we continue to raise minimum aid as an ongoing issue of concern that we believe should be addressed to avoid significant budget problems at the local level in future years.
Please Re-Establish the Foundation Budget Review Commission
The foundation budget school spending standard that guides Chapter 70 funding was first enacted as part of the landmark 1993 education reform law and has largely remained unchanged since that time. In addition to the need to adjust the foundation budget to reflect the many substantial changes that have occurred in public education over the past 20 years, the current foundation budget structure clearly understates many key education expenses and does not fully reflect the cost of operating modern school systems, as evidenced by the fact that cities and towns spend $2.1 billion more to run their schools than the amount called for in the foundation budget, and a majority of districts are slated to only receive less-than-adequate minimum aid increases in the future. We applaud you for including the re-establishment of the Foundation Budget Review Commission in H. 2 in order to launch a much-needed review of the foundation budget framework. Fortunately, the Legislature has included this important step in H. 4242 (sections 124 and 278), and we ask you to sign this language so that all stakeholders can participate in the process to update the formula to meet current and future needs.
Please Support the Provision to Ensure Equity in Net School Spending
The Legislature’s fiscal 2015 budget includes important language to establish equity in calculating net school spending under Chapter 70 (section 260). This essential provision will allow all communities, at local option, to count health insurance costs for retired school employees in fiscal 2016 and beyond, phased in over four years, and allow the Department of Elementary and Secondary Education to waive penalties in the meantime. This update is vitally needed because current rules exclude these costs from net school spending in some districts, but allow the costs to count in others. On behalf of all of the impacted cities and towns, we ask you to retain this crucial budget language, and thus ensure equitable treatment for all communities and districts.
REIMBURSEMENTS FOR SCHOOL AID LOSSES RELATED TO CHARTER SCHOOLS
The diversion of Chapter 70 school aid away from public schools to pay tuition to charter schools has imposed 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 commitment under Section 89 of Chapter 71 of the General Laws to reimburse school districts for the loss of a portion of their Chapter 70 aid that is redirected to fund charter schools (line item 7061-9010).
We deeply appreciate your leadership this year to secure a $27.6 million supplemental appropriation to fully fund the program in fiscal 2014. Although H. 4242 would allocate $80 million to this account, the amount is still approximately $33 million below the full funding appropriation that is called for in the statutory formula, which was signed into law only a few years ago.
The funding shortfall means that cities and towns will only receive a fraction of the reimbursements due according to state law, and this will impact a large number of communities. When charter school reimbursements fall short, communities are forced to cut other programs and services to make up the difference. Of the 20 cities and towns with the largest shortfalls, ranging from $250,000 to $10.3 million, 14 of them have been deemed by the state to have underperforming schools. These include some the state’s poorest and most financially distressed cities and towns. Thus, the underfunding of the charter school reimbursement formula is harming the most vulnerable and challenged school districts and communities.
Please Prioritize Full Funding in Fiscal 2015
We are respectfully asking you and the Legislature to close next year’s $33 million gap as soon as possible, perhaps in the year-end fiscal 2014 deficiency budget or the first supplemental budget of fiscal 2015. Delaying full funding of this key reimbursement program will cause significant disruption in the delivery of school services.
SPECIAL EDUCATION CIRCUIT BREAKER
We support full funding of the Special Education Circuit-Breaker Program through which the state provides a measure of support for services provided to high-cost special education students (line item 7061-0012). Under Section 5A of 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 cities, towns and school districts with the increasingly burdensome and volatile cost of complex and expensive special education services.
The MMA and municipal and school officials appreciate your demonstrated record of commitment to full funding for this vital program in fiscal 2013 and 2014. H. 4242 provides the $5 million increase that is necessary to fully fund the circuit-breaker reimbursements in fiscal 2015. We appreciate this commitment to full funding, and ask you to sign the $257.5 appropriation.
SCHOOL TRANSPORTATION REIMBURSEMENTS
Please Support the Legislature’s $18.7 Million Increase for Regional School Transportation
We urge you to approve the funding increase for transportation reimbursements to regional school districts (line item 7035-0006). Funding for this account is vital to regional districts and member cities and towns, particularly in sparsely populated parts of the state. The current fiscal 2014 appropriation of $51.5 million is nearly $7 million below fiscal 2008 levels and is still far below full funding. Decades ago, the state promised 100 percent reimbursement as an incentive for towns and cities to regionalize, and the underfunding of this account has presented serious budget challenges for these districts, taking valuable dollars from the classroom. This is why the MMA and local officials in every corner of the Commonwealth strongly support the Legislature’s impressive $18.7 million increase, an exceptional step proposed by Senator Brewer that would bring reimbursements up to the highest percentage in a generation.
Please Support Funding for Out-of-District Vocational Education Student Transportation
The fiscal 2014 state budget included a $3 million item to reimburse communities for a portion of the state-mandated cost of transporting students to out-of-district placements in vocational schools (line item 7035-0007). This account 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, and state law mandates communities to provide the transportation. H. 4242 maintains this important program at a reduced level of $2.24 million. The MMA asks you to approve this funding so that students can pursue out-of-district placements without placing a high financial burden on their hometowns.
McKinney-Vento Homeless Student Transportation Costs Remain Underfunded
The budgets put forward in H. 2 and H. 4242 level-funded reimbursements for the transportation of homeless students at $7.4 million (line item 7035-0008), which is $7.5 million below the full reimbursement called for under the state’s unfunded mandate law. Two years ago, the State Auditor ruled that the adoption of the federal McKinney-Vento law imposed an unfunded mandate on cities and towns. The program was funded at $11.3 million in fiscal 2013 and cut to $7.4 million in fiscal 2014. Level-funding the program would continue to impose a significant burden on those cities and towns that are providing transportation services to homeless children who have been placed in their communities by the state, and we respectfully ask you and the Legislature to provide full funding for this mandated program in future supplemental budgets for fiscal 2014 and fiscal 2015.
PLEASE REJECT BUDGET LANGUAGE TO LIMIT MUNICIPAL DECISION-MAKING AUTHORITY ON HEALTH INSURANCE
Language in the Legislature’s budget (sections 76 and 77) would unilaterally extend a three-year freeze on changing retiree health insurance contribution percentages by an additional two years. We strongly urge you to reject these budget provisions, as they represent an unfair, unwise and unwarranted intrusion into local decision-making.
Under existing law, any city or town that used sections 22 or 23 of Chapter 32B (the landmark 2011 municipal health insurance reform law) to implement plan design changes or join the Group Insurance Commission had to wait until July 1, 2014, to change retiree health insurance contribution percentages. Sections 76 and 77 of H. 4242 would unilaterally extend that freeze for two more years, until July 1, 2016, for any municipality that has adopted or may soon adopt the provisions of the 2011 municipal health insurance reform law. Under these proposals, any community that has used or plans on using Chapter 32B to make plan design changes or join the GIC would be prohibited from changing retiree contribution percentages unless the municipality voted to change the contribution rate prior to May 1, 2014. This change would delay the ability of more than 70 communities to take action on retiree contribution percentages. At a time when OPEB costs are becoming unsustainable, this intrusion into local discretion would thwart municipal authority and prevent local taxpayers and their elected leaders from even considering reasonable changes in contribution ratios.
These sections would undermine the decision-making power of cities and towns to determine health insurance contribution percentages for retirees, and serve as a disincentive for additional communities to adopt the 2011 municipal health insurance reform law. Municipal officials have been operating in good faith under the current law, and it is unfair and poor policy to interfere with their authority to act in the best interests of local taxpayers, employees and retirees.
PAYMENTS IN LIEU OF TAXES (PILOT)
We support full funding of the Commonwealth’s obligations and commitments to the program for payments-in-lieu-of-taxes for state-owned land, known as PILOT (line item 1233-2400). This is a particularly important program for those cities and towns that host and provide municipal services to state facilities that are exempt from the local property tax. In fiscal 2008, PILOT funding was set at $28.3 million, and funding in fiscal 2014 was set at $$26.77 million. The Legislature’s budget would level-fund the program at the same $26.77 million amount. We ask you to approve this funding level, recognizing that PILOT payments would still be far below full funding.
FUNDING THE STATE MATCH FOR THE COMMUNITY PRESERVATION ACT
In recent years, the state’s match for the Community Preservation Act has been significantly underfunded, falling from 100 percent down to just 26 percent in fiscal 2013. In fiscal 2014, the state budget included a provision to use end-of-the-year surplus revenues from fiscal 2013 to boost reimbursements by $25 million, breathing new life into the state’s CPA match and bringing the state’s contribution up to 52 percent. Because of lagging deeds excise collections, this money must again be added to the CPA program. Otherwise, cities and towns that have adopted the CPA will see a much lower state match next year.
The Legislature’s fiscal 2015 budget (Section 242) would maintain this policy and transfer 50 percent of the “consolidated net surplus” left over from fiscal 2014, up to $25 million, into the Community Preservation Trust Fund. The MMA strongly supports this funding level, as this amount is necessary to keep the state match up at the 50 percent level. More than 150 cities and towns have adopted the Community Preservation Act, based in great part on the existence of a reliable and adequate state match, and the $25 million transfer would maintain the program’s current level of success and investment.
SHANNON ANTI-GANG GRANT PROGRAM
We support continued funding for the highly successful and effective Shannon anti-gang grant program that has helped cities and towns respond to and suppress gang-related activities (line item 8100-0111). We strongly support the proposed $8.25 million funding level for fiscal 2015 that is included in H. 4242.
SAFE AND SUCCESSFUL YOUTH INITIATIVE
The Safe and Successful Youth Initiative (line item 4000-0005), which seeks to reduce youth violence through wraparound services for those most likely to be victims or perpetrators of gun violence, is vital to violence prevention efforts in dozens of communities. The MMA supports the funding level of $4.6 million included in H. 4242.
MUNICIPAL ADMINISTRATION BUDGET ISSUES
Procurement Threshold Relief
The Legislature’s budget bill (sections 61-66) would increase the thresholds for the use of competitive sealed bidding in the municipal procurement of goods and services from $25,000 to $35,000. Below this new threshold, cities and towns would still be required to solicit three written or oral quotes or use sound business practices for the smallest procurements of less than $10,000. It is important to make regular adjustments to the specific dollar amounts listed in state statute to keep pace with inflation and to help cities and towns save time and money for small procurements, and sections 61-66 would make a very reasonable adjustment in the sealed bidding threshold. The MMA asks you to support this language as part of your ongoing efforts to focus on municipal relief from outdated state regulations.
Chapter 40S Payments
We support full funding of the Commonwealth’s commitment to make payments to cities and towns that approve “smart growth” zoning districts under Chapter 40R and are due school cost payments under Chapter 40S (line item 1233-2401). The MMA has been a strong advocate 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. Chapter 40S reimbursements are funded at $500,000 this year. Your H. 2 recommendation maintained that commitment, and we are pleased that H. 4242 reflects your recommendation.
SUMMARY
This is a critical time for our economy, and for cities, towns and local taxpayers. We respectfully ask that you adopt the local aid investments, targeted funding and policy positions detailed above.
Massachusetts is starting to find some new vigor in its economy. But the Massachusetts economy will only reach its 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 do not hesitate to contact us at any time if your office has any questions or needs additional information by having your staff reach out to me or MMA Legislative Director John Robertson at (617) 426-7272 or jrobertson@mma.org at any time.
Again, we thank you very much for your outstanding leadership, support, dedication and commitment to the cities and towns of Massachusetts.
Sincerely,
Geoffrey C. Beckwith
Executive Director, MMA
cc: The Honorable Glen Shor, Secretary, Executive Office for Administration & Finance
The Honorable Richard Sullivan, Chief of Staff, Office of the Governor
Ms. Pamela Kocher, Director of Municipal Policy, Executive Office for Administration & Finance