Archived Information

School Finance: Chapter 70 Program

FY04 Foundation Reserve Awards

01/08/2004

The foundation reserve ("pothole") program was originally established by the Legislature in FY96, to supplement the chapter 70 foundation funding program and provide relief for extraordinary and unanticipated needs. The FY04 appropriation is $7 million. Applications were received from 88 municipalities and school districts. Applications were evaluated in four separate categories, described below. This year's legislative language requires that priority be given to those applications which qualified for categories one through three.

Category 1 - Extraordinary increases in required local contributions. These awards go to the municipality rather than the school district, and reflect the extra effort that the city or town has already been required to make under the chapter 70 formula. For FY04, municipalities qualified for an award in this category if their total required local contribution for all districts increased by at least nine percent over last year.

Category 2 - Extraordinary enrollment increases. These awards go to school districts with high enrollment growth in the current year, helping to compensate for the one-year lag in enrollment data used in the chapter 70 formula. Districts qualified for an award in this category if their total foundation enrollment increased by at least four percent from last year. The number of awards in this category is down significantly from past years, reflecting the fact that statewide K-12 enrollment has peaked and is no longer growing.

Category 3 - Reductions in required net school spending due to chapter 70 aid reductions or low aid per pupil. This is a new category, which the Legislature added this year in response to the widespread chapter 70 cuts in the FY04 state budget. The criteria for this category were a reduction in the district's required net school spending (one percent or greater) and either a significant cut in chapter 70 aid (18% or greater) or low chapter 70 aid in comparison to other similar communities. Low chapter 70 aid was measured by comparing the district's actual aid to the amount it should receive under the proposed "target share" formula, with a shortfall of at least 25% needed to qualify.

Category 4 - Other extraordinary and unanticipated needs. The last, non-priority category was for other exceptional circumstances where a one-time foundation reserve award could address a particular problem. Because of the limited funding this year, very few awards were made in this category.

The chart below lists the 47 districts and municipalities which qualified for awards under one of the above categories. Please note that some districts may have been eligible under more than one category but were limited to one award.

We regret that we were unable to fund a significant number of applications due to the limited funds available. Most of the applications which were not approved were for problems such as increasing special education costs; grant reductions; urgent building repair needs; and budget shortfalls caused by uncontrollable increases in operating costs. These are all legitimate and urgent issues, and we recognize that this has been an extremely difficult year for school district budgets. Unfortunately, these are widespread issues which affect the majority of school districts throughout the state and which cannot be fairly addressed through foundation reserve awards. The limited funding available through this program by necessity must be targeted at isolated and unusual situations.

As has been our practice in past years, a small portion of the available funding has been held back to allow us to address any unexpected emergency situations which may arise during the second half of the school year.

Municipalities and districts receiving awards will be sent a formal award letter with payment information.