ESE Budget

Update on FY09 and FY10 Funding for State Aid Programs

January 29, 2009

On January 28 the Governor released his House 1 budget proposal for FY10, and at the same time he implemented some additional 9C spending reductions for FY09. Here is a summary of those actions as they relate to the major state aid programs for elementary and secondary education.

The FY10 budget proposals will be considered by the Legislature in the upcoming months. At this point we do not know if there will be an early local aid resolution to finalize the Chapter 70 aid allotments, so it is possible that final numbers will not be available until action on the state budget is completed in June or July. School districts are advised to maintain some flexibility in their budget projections to accommodate changes that may occur during the legislative process.

Information on funding for categorical grant programs will be provided by the appropriate program units in the Department of Elementary and Secondary Education as it becomes available.

For further information on state aid programs, please contact the Department's school finance staff.

Chapter 70

• There is no change in Chapter 70 aid and minimum spending requirements for FY09.

• For FY10, the Governor has proposed level funding the Chapter 70 aid allotments for all operating school districts. We will continue to calculate foundation budgets for all districts and required local contributions for municipalities. See the Chapter 70 section of the ESE school finance website for a detailed description of the methodology used for these calculations and for the preliminary estimates of FY10 net school spending requirements.

• Action is pending in Washington on a federal economic stimulus bill that is expected to provide some supplemental funding for K-12 education. If enacted, these funds will help compensate for the state's inability to increase Chapter 70 funding in FY10.

Special Education Reimbursement ("Circuit Breaker")

• FY09 funding for the circuit breaker appropriation has been reduced by $14,562,017, or 6.3%. We are currently projecting a final reimbursement rate of 72% for FY08 expenditures. The preliminary payments made earlier this year were based on a 72% rate.

• The $2 million appropriated for the reimbursement of special education transportation expenditures has been eliminated, so this program will not be implemented this year.

• For FY10, the Governor has proposed combining this appropriation with the appropriations for Educational Services in Institutional Settings and the Pilot Concurrent Enrollment program. Our preliminary projection is that the circuit breaker reimbursement rate will be in the range of 70%.

Transportation Reimbursement

• FY09 funding for regional transportation reimbursements has been reduced by $2,942,400, or 4.8%. We currently estimate that the reimbursement rate for FY08 expenses (funded by the FY09 appropriation) will be in the range of 80%.

• FY09 funding for vocational non-resident transportation reimbursement has been reduced by $99,600, or 4.8%. We currently estimate that the reimbursement rate for FY08 expenses (funded by the FY09 appropriation) will be in the range of 60%.

• The Governor has proposed combining the two transportation reimbursement programs into a single appropriation in FY10, funded at $54,946,855. Our preliminary estimate is that this will provide a reimbursement rate in the range of 70%.

Charter School Tuition Reimbursement

• FY09 tuition reimbursements for sending districts are expected to be fully funded. The current estimates of charter school tuition charges and reimbursements for this year are posted in the charter school section of the ESE school finance website.

• For FY10, the Governor has proposed several significant changes to the charter school tuition and reimbursement process. We have posted a description of the proposed changes and a chart showing projected charges and reimbursements for each district.

Foundation Reserve ("Pothole")

• This program is proposed for elimination in FY10.