School funding overhaul requires a much larger state commitment

From the Beacon, February 2019

Late last month, Gov. Charlie Baker submitted his $42.7 billion fiscal 2020 state budget plan to the Legislature, proposing a spending blueprint that would increase overall state expenditures by 1.5 percent, as the Administration deals with slow revenue growth by restraining most spending across the board and placing an estimated $297 million into the state’s rainy day fund.

A centerpiece of the administration’s budget (House 1) is a seven-year plan to respond to calls for a significant reinvestment in Chapter 70 education aid, after years of below-maintenance increases in state education funding. In spite of a tightly capped property tax, low state aid has led cities and towns to spend more than $2 billion above the prescribed local contribution to schools. Communities have done this by cutting support for core non-school services, such as public works and public safety, and by increasing reliance on the already overburdened property tax. This has created chronic fiscal stress and painful decisions in communities across the state.

House 1 and the administration’s companion education bill would amend the Chapter 70 school finance law in ways that move in the same direction as the recommendations of the Foundation Budget Review Commission, proposing a $200 million increase in Chapter 70 in fiscal 2020. This falls short of the actual need, however, and major gaps in other education funding in the budget would leave a large number of communities behind. The Legislature will need to increase funding and fulfill commitments to all school aid accounts to achieve an effective and lasting Chapter 70 overhaul.

Under House 1, 183 cities, towns and regional districts would be stuck at a meager $20-per-student minimum aid increase. That means 57 percent of all school districts – ranging from rural districts in western Massachusetts to our capital city of Boston – would continue a slow fiscal decline, affecting hundreds of thousands of students.

MMA members have strongly supported full implementation of the Foundation Budget Review Commission recommendations, which would more accurately reflect the costs of health insurance, special education, English language learners, and low-income students. While the governor’s plan implements versions of these steps, the longer implementation period, the lack of sufficient minimum aid, and the staged and more moderate approach in House 1 combine to generate lower Chapter 70 aid than is necessary for at least half of the districts.

Because it is so difficult for one formula to adequately address the distinctions among 406 operating districts, MMA members from across Massachusetts unanimously adopted at last month’s Annual Meeting a resolution calling for at least $100-per-student in minimum new aid, as well as completely overhauling the charter school finance system and fully funding other key accounts, including special education and school transportation.

A critical gap in the administration’s plan is the lack of a real solution to the deeply flawed charter school finance system. Fixing the charter school funding mess is essential to any Chapter 70 reform plan.

The governor’s several proposed changes to the Charter School Reimbursement Program do not come close to achieving the needed permanent fix. Reimbursements this year are set at $90 million, $72 million below the full funding level of $162 million. The governor would increase charter school reimbursements to $106 million in fiscal 2020, while changing the six-year statutory funding schedule of 100 percent reimbursement in the first year and 25 percent in each of the subsequent five years to a new three-year schedule of 100-60-40, phased in over three years. The plan would also increase the facilities assessment payments to charter schools, and make other changes.

The MMA’s immediate analysis is that charter school reimbursements would continue to fall far short. This would continue to divert Chapter 70 funds away from municipally operated school districts and place greater strain on the districts that serve 96 percent of public schoolchildren. No matter what changes are made to the Chapter 70 formula, major problems will continue unless a true resolution of the charter school funding problem is fully integrated into any reform or update of the school finance system.

In addition, House 1 would add only $4.5 million to the Special Education Circuit Breaker Program, for a total of $323.9 million, an increase of only 1.4 percent. Because these costs are expected to rise in fiscal 2020, this means that the governor’s budget would substantially underfund the statutory reimbursement amount. Officials from the Department of Elementary and Secondary Education have said the House 1 appropriation would result in a 70 percent reimbursement amount for high-cost, out-of-district placements, rather than the statutory 75 percent, which indicates a shortfall of approximately $18 million. This is a vital account that every city, town and school district relies on to fund state-mandated services. The MMA will again be asking lawmakers to ensure full funding in fiscal 2020.

House 1 would also level-fund regional transportation reimbursements at $68.9 million and transportation for homeless students (McKinney-Vento) at $9.1 million. This would be a hardship for virtually all communities in regional districts and those that transport homeless students who remain sheltered in hotels and motels.

It’s good that the issue of education finance is now on the front burner, and the administration and the Legislature are committed to action. The final result, however, will need to be more comprehensive, integrated with charter school finance reform, coupled with full funding of all other education programs, implemented over a shorter time period, and supported by adequate minimum aid to avoid leaving any district behind.

Local officials look forward to working with the House, Senate and administration to ensure that 2019 is the year that brings us a powerful and lasting partnership to address the needs of every school and community in Massachusetts.