At local aid hearing, MMA outlines municipal priorities

At a major legislative budget hearing on education and local aid on March 1, the MMA and local officials called for the Legislature to support an increase to Unrestricted General Government Aid of at least 3% for fiscal 2025 and for the state to protect proceeds from the Lottery to fund local aid.

While local officials appreciate the 3% increase in unrestricted local aid proposed by the governor in her fiscal 2025 budget, MMA Executive Director Adam Chapelaine noted that the UGGA account remains below 2008 levels — even without adjusting for inflation.

“The difficult decisions during the Great Recession are still making an impact today at the local level,” he told members of the House and Senate Ways and Means committees during the hearing, which was held at Greenfield Community College. “UGGA provides essential funding for vital municipal and school services, allowing communities to deliver core services to residents and businesses.”

The MMA also spoke about an outside section the governor included in her budget proposal that would allow the Massachusetts State Lottery to create an online platform, known as iLottery, though the proposal does not address how proceeds from the new platform would be allocated. Chapdelaine pointed out that the Lottery was created more than 50 years ago for the sole purpose of funding local aid to cities and towns. Any new Lottery revenue, he said, should continue to be used to support the underfunded UGGA account.

Joining Chapdelaine on the municipal panel were MMA President and Waltham City Councillor John McLaughlin and Athol Town Manager Shaun Suhoski.

McLaughlin addressed the fiscal picture for cities and towns.

“Our local officials are bracing for a difficult budget season for fiscal 2025, where the constraints of municipal finance are clashing with rising costs across the board and generally flat sources of revenue,” he said. “I’m hearing from our members from across the Commonwealth, from big cities to small towns, that the fiscal challenges this year will be daunting, making our state-local partnership even more critical.”

McLaughlin highlighted the importance of supplementary local road and bridge funding that was included in the fiscal 2024 state budget, and asked legislators to build on the governor’s proposal to set aside a portion of “Fair Share” surtax revenue for this purpose.

Suhoski pointed out that cities and towns provide essential services, including public safety, public works, education, senior services, and snow and ice removal, but that they are limited on property tax collections and rely on state aid to stay strong and viable.

The MMA also submitted written testimony outlining municipal priorities for the fiscal 2025 state budget. The testimony includes a graph representing the impact of the Great Recession-era cuts to UGGA.

Chapter 70
The governor’s budget proposal, known as House 2, would increase Chapter 70 school aid by $263 million for fiscal 2025, fulfilling commitments in the Student Opportunity Act, and funding year four of six of the law’s intended implementation schedule.

Chapdelaine noted, however, that two-thirds of operating districts (211 out of 318) would receive only the minimum per-student increase of $30 in the Student Opportunity Act.

The MMA continued its strong advocacy for minimum aid of $100 per student to ensure that all districts can at least keep pace with inflation and maintain school services. Bringing all districts up to the $100 per student threshold would require an additional $35.4 million.

The MMA also asked the Ways and Means committee members to consider another aspect of Chapter 70: the very high increases in mandated local contributions in the foundation budget formula. Chapdelaine pointed out that state-mandated increases in local education spending are far outpacing the growth in local revenues in recent years.

“In cities and towns all across Massachusetts, the increase in local contribution required by Chapter 70 is far above the growth in municipal revenues,” he said. “The result puts a major strain on municipal budgets, regardless of whether they are large beneficiaries of the new SOA rates or minimum aid districts.”

Special Education Circuit Breaker
The MMA expressed support for the governor’s proposal to fund the Special Education Circuit Breaker program at $492 million. The administration has said that the state will leverage $75 million that was included for special education in the fiscal 2023 closeout supplemental budget.

Charter schools
The governor’s budget would fund the charter school reimbursement account at $232 million, intended to meet the commitment in the Student Opportunity Act regarding the state’s statutory obligation to mitigate Chapter 70 losses to charter schools. The MMA noted, 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 reiterated its call for comprehensive charter school finance reform.

Student transportation
House 2 would fund approximately 80% of regional transportation costs, at $99 million. Failure to fully fund this account creates a hardship for virtually all communities in regional districts.

Suhoski said 100% reimbursement would be a big help to many rural districts, some of which are sprawling.

House 2 would level-fund reimbursements for transportation of out-of-district vocational students, providing a reimbursement rate of just 17%. The MMA asked the Legislature to fully fund this account.

The governor’s budget would fund the transportation of homeless students under the federal McKinney-Vento Act at 93%, which the MMA also asked the Legislature to fully fund.

Rural schools
House 2 would level-fund rural school aid at $15 million. Chapdelaine expressed appreciation for the increases in the account in recent fiscal years, but said it still falls short of the $60 million recommendation included in the 2022 report from the Commission on the Fiscal Health of Rural School Districts.

PILOT
House 2 would fund payments-in-lieu-of-taxes at $51.8 million. According to the administration, this amount would hold municipalities harmless from recent valuations.

Surtax funding for local roads and bridges
In addition to her proposed $200 million in Chapter 90 funding for fiscal 2025, the governor’s budget recommends the use of $124 million in Fair Share revenue for local roads and bridges, with $24 million dedicated to rural communities.

McLaughlin noted, however, that cities and towns “needed approximately $715 million for fiscal 2024 alone to ensure that local roads and bridges are maintained in a state of good repair.”

Given the loss of purchasing power of existing funding sources and other local budget pressures, the MMA respectfully requested at least $150 million in the state budget for local roads and bridges in fiscal 2025, which would benefit every municipality in the Commonwealth.

Disaster Relief and Resiliency Fund
House 2 would establish a Disaster Relief and Resiliency Fund to provide relief to cities and towns impacted by extreme weather events. The MMA expressed strong support for the fund as an important first step in ensuring that municipalities have resources immediately available to help when disaster strikes.

Budget process
The House and Senate Ways and Means committees jointly hold a series of hearings in March and early April on various areas of the state budget.

The House is expected to draft and 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.