Agencies seek feedback on municipal contribution to school budgets

The Student Opportunity Act that became law last year updated the spending standard in Chapter 70 school finance law, but did not significantly change how municipal contributions to schools are calculated.

The fairness of these calculations is the topic of a study to be conducted by the Division of Local Services and the Department of Elementary and Secondary Education this fall. The agencies have opened a required public comment period, which will conclude on Oct. 16.

Section 21 of the landmark education law (Ch. 132 of the Acts of 2019) directs the DLS and DESE to jointly study and prepare a report on the fairness of Chapter 70’s municipal ability to pay calculation and the determination of “required local contribution” and school aid amounts.

The specific charge given to DLS and DESE in Section 21 reflects the fact that there are some very different views on fairness in how the local contribution to schools, mainly from the property tax, and school aid are calculated.

Many cities and towns are facing increasing reliance on the property tax to fund schools and rely on minimum aid from the state and the “hold harmless” rule in Chapter 70 to avoid school budget cuts. Some education advocates, however, have proposed ending these provisions and repurposing the funds for use in other school districts with greater need.

A Sept. 14 report from the Massachusetts Business Alliance for Education and Greater Boston Chamber of Commerce proposed a phaseout of hold harmless and minimum aid and ending certain aid paid to wealthier districts. According to the report, elimination of the hold harmless rule would reduce aid to impacted districts by $319 million, based on fiscal 2021 Chapter 70 calculations prepared earlier in the year by the DESE.

The DLS and DESE announced last week that the Local Contribution Study public comment period is underway through an online survey until Oct. 16.

Comments are being requested for the variety of topics listed in Section 21, including the following:
• Equity, predictability and accuracy of how the state determines the required local contribution
• The impact of enrollment demographics, including in districts with flat or declining enrollment
• An analysis of the impact of Proposition 2½ on the ability of municipalities to make their required local contributions and recommendations to mitigate the constraints of Proposition 2½
• The impact of the 82.5% maximum local contribution of foundation on the equity of required local contributions and the distribution of Chapter 70 school aid

Section 21 also requires recommendations to refine or revise the method of determining required local contribution and other elements of Chapter 70 to improve equity, predictability and accuracy.

Section 21 requires the DLS and DESE to file its report with the Legislature by Dec. 1.

This study is separate from the Section 22 study and report on the long-term fiscal health of rural school districts that are facing or may face declining student enrollment, although there are many areas where the work will overlap.