ESE Budget

Update on State Aid Programs for Elementary and Secondary Education

July 21, 2008

The Governor signed the fiscal year 2009 state budget on July 13. Here is a summary of the state aid appropriations for elementary and secondary education:

Chapter 70

Funding for the Chapter 70 program has been increased by $223 million (six percent) to $3.949 billion. The Chapter 70 aid allotments and minimum spending requirements are identical to the amounts included in the Governor's House 2 budget proposal in January and the Legislature's local aid resolution in March. We know that the efforts of the Governor and the Legislature to provide accurate Chapter 70 information earlier in the budget cycle are very much appreciated by local officials.

The Governor has appointed a blue-ribbon Readiness Finance Commission, co-chaired by Gloria Larson, president of Bentley College, and John Fish, president of Suffolk Construction. This commission has been asked to: recommend short-term education investments and Chapter 70 formula adjustments for the FY10 budget; develop cost estimates for the initiatives in the recently-released Readiness Project report; recommend opportunities for systemic cost savings and efficiencies; identify potential sources of additional revenue; and outline options for a comprehensive overhaul of the state's education finance system. The commission is expected to release its initial report by the end of this calendar year.

The Legislature has also directed ESE to study and report on the impact of the regional school allocation component of the Chapter 70 formula, which has been revised over the last several years. That report is also expected by the end of the calendar year.

Foundation reserve ("pothole")

The pothole program has been level funded at $5,500,000. Changes to the eligibility criteria should mean that some additional districts will qualify, but the lower funding will reduce the average size of the awards. Application forms, which outline the eligibility criteria, have been posted on the ESE school finance webpage. Eligible municipalities and districts must submit their applications by August 15. Awards will be announced in mid-September.

Special education circuit breaker

Funding for the circuit breaker program has been increased by $10 million to $230,043,700. Claim forms will be reviewed as they are received, and initial payments will be made this fall. As in past years, the reimbursement rate for the initial payments will be somewhat lower than the statutory 75% rate. After we have received and processed all of the claim submissions, and have reviewed the results of our ongoing audits, we will be able to determine if the appropriation is sufficient to bring the reimbursement rate up to the statutory 75% level. Last year's reimbursements were made at 75%.

In addition to the reimbursement of FY08 expenses, up to $5 million will be available for payments to districts experiencing extraordinary increases in their eligible FY09 expenses. Instructions and application forms for extraordinary relief will be distributed in February.

Regional and vocational transportation

Funding for regional school transportation was increased by $3 million to $61,300,000, and funding for non-resident vocational transportation was increased by $125,000 to $2,075,000. Payments will be made to districts based on reported expenses on the FY08 end of year financial returns. Final reimbursement percentages from last year were 89.9% for regional and 64.5% for vocational. This year's reimbursement percentages will be calculated after we have received and processed all of the end of year returns.

Special education transportation

The FY09 budget includes new funding of $450,000 to establish ten collaborative transportation networks throughout the Commonwealth. This funding will allow the expansion of the pilot program initiated three years ago to demonstrate that transportation of students to out-of-district special education placements can be accomplished at a lower cost and with improved quality of service by delegating the planning and contracting for such transportation to educational collaborative networks. The Massachusetts Organization of Educational Collaboratives (MOEC) will provide coordination and support services to the ten collaborative transportation networks. In addition, $2 million has been set aside to reimburse districts participating in this program for a portion of their special education transportation costs. Further information on these new funding opportunities will be posted on the ESE school finance webpage as soon as it is available.

Charter school tuition reimbursement

Funding for charter school tuition reimbursements was increased by $6 million to 79,751,579. Preliminary projections indicate that this program is underfunded by approximately $5 million. However, the calculated entitlements are likely to change after we receive updated district budget and charter school enrollment reports this fall.

The FY08 appropriation for tuition reimbursements was underfunded by $4.7 million. The Governor has asked the Legislature for a supplemental appropriation to cover that shortfall.

Regional study grants

The FY09 budget includes new funding of $100,000 to reimburse local planning and implementation expenses related to the creation or expansion of regional school districts. Information on applying for these grants will be available later this summer. In the meantime, municipalities and districts should begin thinking about ways in which these grants could be productively used to advance regional planning efforts.

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For additional information on these programs, please contact the Department's school finance staff.