Gov. files $38B state budget plan with local aid increases

Gov. Charlie Baker today submitted a $38.1 billion fiscal 2016 state budget plan, a spending blueprint that would increase overall state expenditures by 3 percent as the new administration seeks to close a projected $1.5 billion structural budget deficit by restraining spending, eliminating 4,500 state jobs through an early retirement program, increasing state employee contributions to health insurance, and offering a tax amnesty plan.
 
The governor’s budget includes a $34 million increase in Unrestricted General Government Aid and a $105.3 million boost to Chapter 70 school aid.
 
Most other municipal and education aid accounts in the governor’s budget proposal would remain at post-9C fiscal 2015 levels. This includes the special education circuit breaker, charter school reimbursements, payments in lieu of taxes, regional school transportation, Shannon anti-gang grants, and library aid.
 
The governor would increase homeless student transportation (McKinney-Vento) reimbursements by $1 million, and fund METCO at the original fiscal 2015 level, restoring the mid-year 9C cuts.
 
• Link to Section 3 – Unrestricted General Government Aid and Chapter 70 amounts listed by community
• Link to Department of Education’s calculation of fiscal 2016 Chapter 70 aid for each school district based on governor’s budget
 
Unrestricted municipal aid
The governor’s budget submission, known as House 1, would provide $979.8 million for Unrestricted General Government Aid, a $34 million increase over current funding. This fulfills one of Gov. Baker’s major campaign promises – to increase direct municipal aid in fiscal 2016 by at least 75 percent of the growth rate in state tax revenues, with a target of reaching 100 percent in future years.
 
The $34 million would increase UGGA funding by 3.6 percent, which is 75 percent of the projected 4.8 percent increase in state tax collections next year. This would be the largest increase in discretionary municipal aid in nearly a decade. Every city and town would see its UGGA funding increase by 3.6 percent.
 
Chapter 70 school aid
The governor’s budget submission also proposes a 2.4 percent increase in Chapter 70 education aid, or $105.3 million, with a provision providing every city, town and school district an increase of at least $20 per student. House 1 would continue to implement the target share provisions enacted in 2007.
 
This Chapter 70 increase would be similar to growth levels in recent years. Because most cities and towns only receive minimum aid – 245 operating districts in cities, towns and regions would only receive minimum aid under House 1 – the MMA is urging the governor and Legislature to agree on a budget that provides minimum aid of at least $100 per student, and will continue to advocate for higher funding.
 
House 1 contains language that would continue to allow communities to count retiree health insurance toward their net school spending, but only if they have done so beginning when the school finance law first went into effect in 1994, or if they have already voted to adopt last year’s local-option provision in Section 260 of the fiscal 2015 general appropriations act to allow a phase-in of retiree health insurance costs in their net school spending calculation.
 
Special education circuit breaker
The governor’s budget would level-fund the special education circuit breaker program at $253.4 million. Because special education costs are expected to rise in fiscal 2016, this means that the governor’s budget likely underfunds reimbursements by at least several million dollars.
 
This is a vital account that every city, town and school district relies on to fund state-mandated services. The Legislature has fully funded the program for the past three years, and the MMA will again be asking lawmakers to ensure full funding in fiscal 2016.
 
Charter school reimbursements
Under state law, cities and towns that host or send students to charter schools are entitled to be reimbursed for a portion of their lost Chapter 70 aid. The state fully funded the reimbursement program in fiscal 2013 and 2014, but is underfunding reimbursements by approximately $36 million this year.
 
The governor’s budget would level-fund charter school reimbursements at $76.8 million, which would guarantee another major shortfall in fiscal 2016, and result in cutbacks for the majority of students who remain in the traditional school setting.
 
Regional school transportation
Last November, former Gov. Deval Patrick used his 9C budget powers to eliminate the $18.7 million increase regional school transportation reimbursements that the Legislature originally enacted for fiscal 2015, reducing the final amount to $51.5 million. Gov. Baker’s budget submission would level-fund regional transportation reimbursements at the $51.5 million amount. This would be a hardship for virtually all communities in regional districts.
 
McKinney-Vento reimbursements
The governor’s budget would add $1 million to increase reimbursements for the transportation of homeless students to $8.4 million. While the account remains below the full reimbursement called for under the state’s unfunded mandate law, it would be the first increase since fiscal 2013.
 
Separately, the governor has proposed a new reserve fund and action plan to decrease the placement of homeless families in hotels and motels, which would reduce the cost of the mandate on cities and towns, over time.
 
METCO
The governor’s fiscal 2016 budget would increase funding for the METCO program by $1.2 million, returning it to the $19.1 million level passed in the original fiscal 2015 budget. The $1.2 million reduction in fiscal 2015 came from 9C cuts in November and February.
 
Payments-in-lieu-of-taxes, Shannon grants, library aid
The governor’s budget would level fund PILOT payments at $26.77 million, Shannon anti-gang grants at $7 million, and library grant programs at $18.5 million.

• Link to the governor’s press release about his FY16 state budget bill
• Link to the governor’s FY16 state budget recommendation