School Finance: Chapter 70 Program

FY08 Preliminary Chapter 70 Aid and Net School Spending Requirements

February 28, 2007

Pursuant to section 6 of chapter 70 of the General Laws, the Commissioner of Education is issuing the preliminary estimates of Chapter 70 school aid and net school spending requirements for FY08. These estimates are based on House 1, Governor Patrick's proposed state budget for the coming fiscal year. House 1 provides $3.705 billion in Chapter 70 school aid for FY08, an increase of $200 million (5.7%) over FY07. The FY08 program continues the major reforms enacted in FY07, although the state budget situation does not permit full funding of all of those changes.

The Governor has also indicated his intent to take a fresh look at all aspects of the state's school financing system, including the foundation budget itself. This review will be carried out during the coming year, in consultation with local officials, teachers' organizations, research groups, and other interested stakeholders, and the results will help inform the Governor's budget proposals for FY09 and succeeding years. It would obviously have been impossible to complete such a comprehensive review in the short time frame allotted for the preparation of the FY08 budget.

Here are highlights of the FY08 program:

• The foundation budget calculation is based on the same model used in FY07. All foundation budget factors have been increased by 4.66%, using the federal government's price deflator index for state and local government expenditures.

• The required local contributions are based on the aggregate wealth model first used in FY07. Each municipality's target contribution has been updated using 2006 property values and 2004 personal income data. For municipalities with required contributions above their target, the requirement is reduced by 30% of the gap (compared to 20% last year). This continues the progress, albeit at a slightly slower pace, toward the taxpayer equity goals that were established last year.

• Foundation aid is fully funded.

• Down-payment aid and growth aid, first introduced in FY07, are continued, but calculated allotments are prorated at 47% because of the state's budget situation.

• Minimum aid is fully funded, guaranteeing every district a minimum increase of at least $50 per pupil.

These are preliminary estimates subject to change as the House and Senate deliberate on the budget. Our purpose in providing these estimates at this time is to assist cities and towns in their own budget preparation for FY08. We advise you to construct your local budgets with sufficient flexibility to accommodate the changes that typically occur in the state budget process. The Commissioner will issue the final, official school spending requirements as soon as the Governor and Legislature approve either the FY08 state budget or an earlier local aid resolution. Those final numbers will then match the FY08 cherry sheets to be issued by the Department of Revenue.

The Department of Elementary and Secondary Education has prepared the following materials to assist local officials in understanding the state aid calculations and local contribution requirements in this year's Chapter 70 program:

• Summary chart showing foundation enrollment, foundation budget, Chapter 70 aid, and required local contributions for each school district.

• Summary chart for regional school districts , showing foundation enrollment and required local contribution for each member of the district.

• White paper describing the major components of the formula.

• Complete formula spreadsheet showing the detailed calculations for each municipality and district.

Questions about the Chapter 70 program should be addressed to either: