Archived Information

School Finance: Circuit Breaker

FY98 Foundation Reserve Program

Purpose: To provide 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. The foundation reserve program is an adjunct to the Commonwealth's $2.3 billion Chapter 70 school aid program, which uses a statutory formula to establish the general school aid and local spending requirements for each school district. Recognizing that no formula can work perfectly across a wide spectrum of needs, the Legislature and Governor have made foundation reserve funds available to address any discrepancies and inequities in the Chapter 70 calculations. These are one-time awards, and it is not the intent of this program to relieve a community from its basic financial obligations under the education reform act.

Funding available: $15,000,000 appropriated in line item 7061-0011 of the FY98 general appropriation act.

Eligibility: The following list contains examples of the types of situations which might qualify for a foundation reserve award.

• An extraordinarily large increase in the minimum required local contribution from FY97 to FY98.

• Significant and unforeseeable changes in the municipality's financial situation subsequent to its adoption of a budget for the current fiscal year.

• Extraordinarily large and unanticipated special education expenses.

• Significant reductions in school operating funds due to the use of excess debt credits.

• Significant reduction in total chapter 70 aid from FY97 to FY98.

• Significant reduction in tuition revenue from out-of-district students, or significant increase in tuition costs for students sent out-of-district.

• Urgent and unanticipated building repair needs which are not eligible for SBA emergency funds.

• Significant and sustained enrollment growth over the past several years.

• Anticipated large enrollment increase for the 1997-98 school year.

• Any other exceptional or unusual circumstance which, in the opinion of the Commissioner, imposes an unreasonable hardship on a community in meeting its educational obligations.

A note about requests related to enrollment growth: No funds have been appropriated to provide formula-based enrollment aid. However, districts which have experienced significant growth over the past several years are eligible to receive awards through the competitive process outlined in this memo. Please keep in mind that the statewide enrollment increase from 1991 to 1996 was 11.4%; districts whose growth has been near or below the state average are unlikely to be considered "high growth" districts. Preference will be given to districts where enrollment growth has resulted in declining per pupil spending or lack of progress toward the foundation budget target.

Application process: Applications should be in the form of a letter sent to:

Jeff Wulfson
Chief Financial Officer
Massachusetts Department of Education
75 Pleasant Street
Malden, MA 02148

Applications on behalf of local school districts must be jointly signed by the superintendent and by the mayor, city or town manager, or chairman of the board of selectmen, as appropriate. Applications on behalf of regional school districts must be signed by the superintendent. Applications will not be accepted by e-mail or facsimile.

All applications received on or before AUGUST 29 will receive equal consideration. Awards will be announced at the end of September, and distributed to local treasurers in October. Applications received subsequent to August 29 will be considered on a first-come, first-served basis, subject to funds availability.

Information to be included in your application letter: In your application, please provide the following information:

Amount of funds requested. Please keep in mind that we expect to receive far more applications than we will be able to fund. Although we have not established a strict limit on the amount which can be applied for, common sense dictates that awards in excess of $1 million are unlikely.

Purpose for which the funds will be used. Be as specific as possible, with reference to the improvements in educational services which will result. Do you plan to add teachers to reduce class size or implement time and learning? Provide new instructional equipment? Address neglected building repairs? Repay loans? Note: if funds are requested for staffing, please indicate how this will be funded in future years, recognizing that the foundation reserve program only provides one-time awards.

In some instances, municipalities have already appropriated adequate funding for school operations, but meeting that obligation has placed an undue strain on other municipal services. In such cases, funds may be awarded for the purpose of municipal fiscal relief. Please clearly indicate in your application if you are applying for funds for this purpose. Where funds are requested for municipal relief, the applicant must also apply for a spending waiver from the Department of Revenue if it is eligible to do so. Please submit with your application a copy of your DOR application, or a statement as to why you are not eligible for a DOR waiver. Eligible applicants who do not apply for a DOR waiver cannot receive a foundation reserve award.

The exceptional or unusual circumstances which give rise to your request. Your request should reference one or more of the eligibility categories described above, and sufficient documentation should be included to allow us to evaluate your situation. Because we can only fund awards to a small number of districts through this program, preference will be given to districts dealing with unusual situations. If your situation is a common one, faced by a large majority of districts, you may not fare as well.

Municipal fiscal situation. In addition to documenting that you have spending needs which have been created by exceptional or unusual circumstances, you must also document that this additional spending would be a financial hardship on your community. Please provide information regarding your municipality's fiscal situation, with respect to current tax effort for school spending and other purposes, Prop. 2½ limits, recent override attempts, and any other indicators which might be relevant.

Additional items to note:

• The Department may request additional supporting information for any application.

• The Commissioner's decision on all foundation reserve awards is final.

• Awards made under this program are one-time, non-recurring awards and will not be included in the calculation of base aid in subsequent fiscal years.

• Awards made under this program are classified as state aid and must be appropriated by the local appropriating body. The applicant agrees to use the funds for the purpose specified in the application.

• The amount of the award will be added to the district's net school spending requirement for FY98, unless the funds are specifically requested for municipal fiscal relief or some other non-net school spending purpose.

For further information: Contact Jeff Wulfson by phone (617-338-3300 ext. 706) or by e-mail (jwulfson@doe.mass.edu).