Archived Information

School Finance: Circuit Breaker

1998 State Budget Relating to School Finance Memo

Memorandum

The fiscal year 1998 state budget, signed last week by Governor Weld, contains several provisions related to school finance to which I would like to call your attention.

• The budget significantly expands funding for the three-year old foundation reserve program, popularly known as the "pothole" program. This program provides additional assistance to cities, towns, and regional school districts which are facing unusual financial burdens in meeting their obligations under the Commonwealth's education reform act. A total of $15 million has been appropriated for FY98. Attached to this memo is an information sheet explaining who is eligible and how to apply for additional assistance under this program.

• The budget creates a new special education loan program, which permits us to make three-year loans to school districts facing extraordinary and unanticipated special education costs. A total of $500,000 has been appropriated for FY98. An information sheet for this program is also attached.

• Sections 71 and 72 of the budget amend M.G.L. c.71B §5, which deals with financial responsibility for special education students requiring out-of district placements. Under current law, if a student (or his family) moves from one district to another after July 1, the former district of residence remains financially responsible for that student for the remainder of the fiscal year. This amendment moves the date back to April 1, to better reflect the municipal budget cycle. If a student moves from one district to another between April 1 and June 30, the former district of residence will remain financially responsible for the balance of the current year as well as the entire subsequent year. This provision will take effect next April 1.

• Section 68 of the budget amends M.G.L. c.70 §11, which deals with districts which fail to meet their net school spending requirement. Under the new provisions, required school spending which is unspent in any year - up to a total of 5% of the spending requirement - is automatically carried forward into the following fiscal year without penalty and without the need for further appropriation. The existing provisions which require reduction in state aid for underspending in excess of 5% of the requirement remain unchanged.

• Finally, please note that the spending requirement for professional development activities for FY98 has been increased to $75 per pupil.

We have updated the chapter 70 state aid and net school spending requirement calculations, based on the final state aid allotments contained in the budget. This information is being sent to you under separate cover.

If you have any questions about these programs, please contact Jeff Wulfson, DOE chief financial officer, at (617) 338-3300 ext. 706.