Archived Information

School Finance: Chapter 70 Program

Proposed Amendments To School Finance Statute (Chapter 70)

The Board of Education, at its October 22, 2002, meeting, voted to submit recommendations to the General Court for amendments to the school finance statute (M.G.L. c.70). For the past several years, there has been considerable discussion and debate on changes to Chapter 70, which was significantly revised as part of the 1993 Education Reform Act. Despite the complexity of the issues, and the many disparate viewpoints of those participating in this debate, considerable consensus has developed as to improvements which can and should be made to the statute.

The attached legislative proposal incorporates these ideas, many of which have been previously proposed or supported by the Governor, both houses of the Legislature, and key stakeholder groups. It also includes a number of technical corrections recommended by the Department's school finance staff.

These changes to Chapter 70 offer a number of substantial benefits:

• The components of the foundation budget are updated to better reflect changing educational needs.

• The balance between local and state funding for each city and town is fine-tuned, so that communities of comparable wealth are treated equitably.

• Dollars more closely follow the students, so that growing districts will receive commensurate increases in resources.

• The formula is simplified, allowing it to be better understood by municipal officials and the public.

At the same time, the revised formula reaffirms the basic promise of the original formula - ensuring that every school district has the financial resources to provide an adequate education.

Many of the proposed changes in this legislation were actually used by the Legislature and the Governor in the calculation of Chapter 70 aid during the past two years. Codifying these changes will provide predictability for local officials in the years to come.

As with the original formula, these proposals recognize that the full financial commitment cannot be achieved in a single year. Progress toward the long-range goals will depend on the availability of funding each year, so that the improvements can be implemented in a fiscally responsible manner.

The following is the full text of the proposed amendments:

An Act relative to school finance.

SECTION 1. Section 2 of Chapter 70 of the General Laws, as appearing in the 2000 Official Edition, is hereby amended by inserting after the first paragraph the following:

"Net minimum contribution", the preliminary local contribution minus the excess debt service amount, provided that the excess debt service amount does not cause a district to fall below foundation.

SECTION 2. Said section 2 of said Chapter 70 is hereby further amended by striking paragraph 2, encompassing lines 4 to 8 inclusive, and inserting the following four paragraphs:

"Adjustment aid", for each district, the positive difference, if any, between (A) the district target share multiplied by the foundation budget, and (B) the sum of base aid and foundation growth aid and foundation aid; provided that adjustment aid does not result in total chapter 70 aid increasing by more than ten percent over the prior year's total chapter 70 aid.

"Adjusted equalized property valuation", a municipality's non-residential equalized property valuation plus the product of its residential equalized property valuation and its relative median income.

"Adjusted equalized property valuation per pupil", adjusted equalized property valuation divided by foundation enrollment.

SECTION 3. Said section 2 of said Chapter 70 is hereby further amended by striking paragraph 4, encompassing lines 12 to 15 inclusive, and inserting in its place the following:

"Assumed in-school special education enrollment", three point seven five percent of total foundation enrollment of a district not counting vocational or pre-school enrollment, plus four point seven five percent of vocational enrollment. In fiscal year 2005 and thereafter, four percent of total foundation enrollment of a district not counting vocational or pre-school enrollment, plus five percent of vocational enrollment.

SECTION 4. Said section 2 of Chapter 70 is hereby further amended by striking paragraph 5, encompassing lines 16 to 36 inclusive, and inserting in its place the following:

"Base aid", the chapter 70 formula aid from the previous fiscal year.

SECTION 5. Said section 2 of said Chapter 70 is hereby further amended by inserting in paragraph 6, line 40, "technology allotment" after the phrase "extraordinary maintenance allotment".

SECTION 6. Said section 2 of said Chapter 70 is hereby further amended by inserting after paragraph 9 the following new paragraph:

"Chapter 70 formula aid", the sum of base aid, foundation growth aid, foundation aid, and adjustment aid, provided that chapter 70 formula aid shall not be greater than foundation budget.

SECTION 7. Said section 2 of said Chapter 70 is hereby further amended by inserting after paragraph 11 the following new paragraph:

"District target share", for each district, the weighted average of its member municipalities' municipal target shares, with the weights given by the municipality's share of the district's total foundation budget.

SECTION 8. Said section 2 of said Chapter 70 is hereby further amended by striking the first clause of paragraph 12, encompassing lines 65 to 72 inclusive, and inserting in its place the following:

"Enrollment categories", the number of students for whom the district is financially responsible shall be placed in one and only one of the following enrollment categories depending on the grade and program to which the students are assigned:

SECTION 9. Said section 2 of said Chapter 70 is hereby further amended by striking paragraphs 14 and 15, encompassing lines 104 to 112, inclusive.

SECTION 10. Said section 2 of said Chapter 70 is hereby further amended by striking paragraph 19, encompassing lines 134 to 136, inclusive, and inserting in its place the following:

"Foundation aid", for each district, the positive difference, if any, between the foundation budget and the sum of the preliminary local contribution, base aid, and foundation growth aid.

"Foundation growth aid", for each district, the product of the district target share and the change in the foundation budget since the prior year.

SECTION 11. Said section 2 of Chapter 70 is hereby further amended by inserting in paragraph 24, line 180, "technology allotment" after the phrase "extraordinary maintenance allotment".

SECTION 12. Said section 2 of said Chapter 70 is hereby further amended by striking paragraph 30, encompassing lines 234 to 240, inclusive.

SECTION 13. Said section 2 of Chapter 70 is hereby further amended by striking lines 327 to 329, inclusive, and inserting in their place the following:

(h) three hundredths multiplied by the number of low-income students attending schools in the district in the preceding fiscal year.

SECTION 14. Said section 2 of Chapter 70 is hereby further amended by striking paragraph 41, encompassing lines 342 to 350, inclusive, and inserting in its place the following:

"General revenue sharing aid", the amount of assistance from the commonwealth to be received by a city or town in a fiscal year from the following local aid programs: (1) payments in lieu of taxes for state-owned lands distributed pursuant to section seventeen of chapter fifty-eight, (2) the distribution to cities and towns of the balance of the State Lottery Fund in accordance with the provisions of clause (c) of section thirty-five of chapter ten, and (3) additional assistance, so-called, as distributed pursuant to section eighteen E of chapter fifty-eight.

SECTION 15. Said section 2 of Chapter 70 is hereby further amended by striking paragraphs 42 to 44, encompassing lines 351 to 387, inclusive.

SECTION 16. Said section 2 of Chapter 70 is hereby amended by striking paragraph 46 and 47, encompassing lines 398 to 411, inclusive.

SECTION 17. Said section 2 of Chapter 70 is hereby amended by striking paragraph 48, encompassing lines 412 to 453, inclusive, and inserting in its place the following:

"Municipal revenue growth factor", the change in local general revenues calculated by subtracting one from the quotient calculated by dividing the sum of (1) the maximum levy for the fiscal year estimated by multiplying the levy limit of the prior fiscal year by a factor equal to one hundred two and one-half percent plus the average of the percentage increases in the levy limit due to new growth adjustments over the last three available years as certified by the department of revenue or as otherwise estimated by the division of local services of the department of revenue where it appears that a municipality may not be entitled to increase its minimum levy limit by two and one-half percent; provided, however, that if the highest percentage during such three years exceeds the average of the other two years' percentages by more than two percentage points, then the lowest three of the last four years shall be used for such calculation; (2) the amount of general revenue sharing aid for the fiscal year; and (3) other budgeted recurring receipts not including user fees or other charges determined by said division of local services to be associated with the provision of specific municipal services for the prior fiscal year, by the sum of (1) the actual levy limit for the prior fiscal year; (2) the amount of general revenue sharing aid received for the prior fiscal year; and (3) other recurring receipts not including user fees or other charges determined by such division of municipal services to be associated with the provision of specific municipal services budgeted by the municipality for the fiscal year preceding the prior fiscal year, if any; provided, however, that for the purposes of this calculation, the levy limit shall exclude any amounts generated by overrides applicable to any year after the fiscal year ending June thirtieth, nineteen hundred and ninety-three; provided, further, that in the absence of an actual levy limit for the prior fiscal year, the actual levy limit for the prior fiscal year shall be estimated by multiplying the actual levy limit of the fiscal year preceding the prior fiscal year by a factor equal to one hundred two and one-half percent plus the average of the percentage increases in the levy limit due to new growth as specified above; provided, further, that such factor shall not be greater than one point five times the statewide growth rate in local general revenues; and, provided, further, that in making any of the calculations required by this definition, said division of local services may substitute more current information or such other information as would produce a more accurate estimate of the change in a municipality's general local revenues and the department shall use such growth factor to calculate the preliminary local contribution, and any other factor that directly or indirectly uses the municipal growth factor.

SECTION 18. Said section 2 of Chapter 70 is hereby amended by inserting after paragraph 48 the following new paragraph:

"Municipal target share", for municipalities with a relative adjusted equalized property valuation per pupil less than one, the smaller of (A) 0.9, and (B) one minus the product of 0.7 and the relative adjusted equalized property valuation per pupil. For municipalities with a relative adjusted equalized property valuation per pupil greater than or equal to one, 0.1 plus 0.2 divided by the relative adjusted equalized property valuation per pupil.

SECTION 19. Said section 2 of Chapter 70 is hereby amended by striking paragraph 50, encompassing lines 474 to 475, inclusive.

SECTION 20. Said section 2 of Chapter 70 is hereby amended by striking paragraph 51, encompassing lines 476 to 495, inclusive, and inserting in its place the following:

"Preliminary local contribution", the prior year's preliminary local contribution multiplied by one plus the municipal revenue growth factor; provided that the preliminary local contribution cannot be greater than the maximum of (A) one point seven times the state average implicit school tax rate multiplied by the municipality's adjusted equalized property valuation, and (B) the prior year's local contribution; provided that for municipalities with (A) an implicit school tax rate less than seventy percent of the state average implicit school tax rate, and (B) a preliminary local contribution that is less than the product of one minus the municipal target share and the foundation budget, the preliminary local contribution shall be increased by ten percent of the difference between (A) the preliminary local contribution and (B) the product of one minus the municipal target share and the foundation budget. Changes to a municipality's preliminary local contribution shall be allocated to its affiliated districts first according to changes in the municipality's portion of its affiliated districts' foundation budget, with any remaining change allocated according to each district's share of the municipality's total foundation budget.

SECTION 21. Said section 2 of said Chapter 70 is hereby further amended by inserting after paragraph 52 the following new paragraphs:

"Relative adjusted equalized property valuation per pupil", the adjusted equalized property valuation per pupil divided by the state average adjusted equalized property valuation per pupil. "Relative median income", a municipality's median individual income divided by statewide median individual income, both as reported by the department of revenue, averaged over the three most recent years for which data is available.

SECTION 22. Said section 2 of said Chapter 70 is hereby further amended by striking paragraphs 53 to 55, encompassing lines 502 to 513, inclusive.

SECTION 23. Said section 2 of said Chapter 70 is hereby further amended by inserting after paragraph 53 the following new paragraph: "State average implicit school tax rate", the statewide total of preliminary local contributions, divided by the statewide total adjusted equalized property valuation.

SECTION 24. Said section 2 of said Chapter 70 is hereby further amended by inserting after paragraph 56 the following new paragraphs:

"Technology allotment", the amounts allotted within a district's foundation budget for technology expenditures in any fiscal year. The technology allotment shall be twenty five dollars multiplied by the sum of the foundation elementary enrollment, the foundation bilingual enrollment, the foundation junior high/middle school enrollment, the foundation high school enrollment, and the foundation vocational enrollment.

SECTION 25. Section 5 of said Chapter 70 of the General Laws is hereby stricken.

SECTION 26. Said Chapter 70 of the General Laws is hereby further amended by striking section 6 in its entirety and inserting in its place the following:

Section 6. In addition to amounts appropriated for long-term debt service, school lunches, adult education, student transportation, and tuition revenue, each municipality in the commonwealth shall annually appropriate for the support of public schools in the municipality and in any regional school district to which the municipality belongs an amount equal to not less than the sum of the net minimum contribution, and all state school aid and grants for education for the fiscal year. Based on the definitions and other provisions in this chapter, the commissioner shall estimate and report such amounts to each municipality and regional school district as early as possible, but no later than March first for the following fiscal year. Notwithstanding the terms of any regional school district agreement to the contrary, no regional school district shall be required to submit a budget to its member municipalities before receiving the estimate by the commissioner concerning the amount of state school aid payable to the regional school district for the following fiscal year. Notwithstanding the provisions of any regional school district agreement, each member municipality shall increase its contribution to the regional district each fiscal year by the amount indicated in that district's share of the municipality's net minimum contribution in that fiscal year. The district shall appropriate the sum of the net minimum contributions of its member municipalities as well as all state school aid received. The district may choose to spend additional amounts; such decisions shall be made and such amounts charged to members according to the district's regional agreement.

Notwithstanding section 2 to the contrary, no school district shall have a required net school spending amount that exceeds 150 per cent of its foundation budget. If the required net school spending exceeds 150 per cent of foundation, then the minimum contribution, or contributions in the case of a regional school district, shall be reduced so that the required net school spending is not more than 150 per cent of foundation. In a regional school district, such reduction shall be done in proportion to the members' enrollment share. If a community that receives a reduced minimum contribution to one of its school districts pursuant to this section belongs to any other district that is below foundation, such community's minimum contribution to the below foundation district shall be increased up to the amount of the decrease authorized by this section or the foundation budget, whichever is less.

SECTION 27. Section 7 of said Chapter 70 of the General Laws is hereby stricken.

SECTION 28. Section 9 of said Chapter 70 of the General Laws is hereby stricken.

SECTION 29. Section 10 of said Chapter 70 of the General Laws is hereby stricken.

SECTION 30. Section 12 of said Chapter 70 of the General Laws is hereby stricken.

SECTION 31. Section 13 of said Chapter 70 of the General Laws is hereby amended by striking paragraphs (c), (d), and (e) and inserting the following:

(c) Any additional funds shall be allocated to cover first, foundation aid; second, foundation growth aid; and third, adjustment aid. If the amount appropriated for state school aid is insufficient to permit full funding of any particular aid category, the available funds shall be allocated on a proportional basis reflecting the ratio of a particular municipality's aid in that category to the total aid in that category for all municipalities for that fiscal year.

SECTION 32. This act shall become effective July 1, 2003.