Archived Information

DOE Budget

7/26/04

FY05 State Budget Update

The Governor signed the FY2005 state budget on June 25 (chapter 149 of the acts of 2004). Here is a summary of the major provisions relating to school finance and state aid programs. Information on changes to categorical grant programs will be distributed through the appropriate DOE program units.

Chapter 70

Final chapter 70 aid and net school spending requirements have been posted on the DOE school finance webpage. For most districts, these numbers are unchanged from the updated preliminary estimates published on May 6. As was the case in FY04, there is no specific spending requirement for professional development.

The budget also includes $6.87 million for foundation reserve ("pothole") awards, and establishes some additional categories for eligibility. Application instructions for these funds will be posted on the DOE school finance webpage in late August.

Special Education Funding

The budget contains a significant increase in funding for, and a major change to, the special education reimbursement ("circuit breaker") program. The appropriation is increased by sixty-six percent to $201.6 million. At the same time, we will be switching to a prior year reimbursement model in order to lessen the data reporting requirements. FY05 payments will be based on districts' final FY04 claims, and will be paid in four equal quarterly installments. FY05 eligible costs will be reimbursed in FY06, and so on.

We expect the FY05 reimbursement rate to be at least 60%. We will provide an updated estimate later this summer, when we complete the processing of FY04 claims. In the fall we will provide districts with a spreadsheet file that can be maintained locally to track placements throughout the year and that can be submitted to the Department when required.

There will be an opportunity for districts to request extra funding in FY05 if they are experiencing extraordinary increases over their FY04 costs. Further instructions will be provided in the fall along with the spreadsheet file.

Because reimbursements will now be based on the prior year's costs, it will no longer be possible for the Department to make payments directly to approved private schools on behalf of school districts. Private schools should invoice the sending districts for all FY05 tuition costs. Districts will then receive their circuit breaker reimbursement in FY06.

We will continue to audit FY04 claims during FY05. Claims in excess of the amount allowed under the program regulations will result in a retroactive adjustment to the FY04 payment as well as an adjustment to the estimated FY05 payment.

Transportation Funding

Regional transportation has been funded at $38 million, a 44% increase over FY04. Please note that the amounts listed for each district on the FY05 cherry sheets are only estimates, based on last year's payments. The actual FY05 entitlements and payments will be calculated later this year based on each district's actual FY04 spending as reported on the end-of-year financial returns.

A new transportation funding program will reimburse municipalities and districts for up to fifty percent of the cost of transporting students to out of district vocational programs if their enrollment has been approved under the provisions of MGL c.74 s.8A. As with other transportation aid programs, reimbursement will be based on reported expenses for the prior year. Municipalities and districts that provided transportation to such students in FY04 will receive a reimbursement payment in FY05 based on the amount reported on the FY04 end of year report. Reimbursements for FY05 expenses will be made in FY06. Please note that to be eligible for this funding, any user fees may not exceed fifty percent of the cost of providing the service.

Charter School Funding

The appropriation for charter school tuition reimbursements to sending districts is increased to $37.7 million, almost triple the FY04 amount. It is expected that this will cover about 77% of the entitlement amounts in accordance with the so-called "100/60/40" statutory formula. Estimates of sending district tuition payments and reimbursements for FY05 have been posted on the DOE school finance webpage.

The budget eliminates the grandfathered tuition caps that applied only to the Hull, Nauset, and UpIsland school districts. After a transition period, these districts will be subject to the same nine percent cap that applies to all other school districts.

The Legislature and Governor are currently working on proposals to modify the formula used to calculate charter school tuition and to provide additional state financial assistance for tuition costs. We will provide more information when the legislation is finalized and becomes law.

School Building Assistance

The Legislature and the Governor are currently working on a separate legislation package for a major restructuring of the SBA program. This legislation would include an expedited payment schedule for projects currently on the waiting list, as well as the establishment of a new independent authority to manage the program. We will provide more information when the legislation is finalized and becomes law.