The Massachusetts Board of Elementary and Secondary Education

Chapter 70 Funding

At the September 18, 2018 Board of Elementary and Secondary Education (Board) meeting, Department of Elementary and Secondary Education (Department) staff will provide the Board with an update on FY19 Chapter 70 funding and possible additional updates to the formula that the Administration and Legislature could consider for FY20, and beyond.

On July 26, 2018, Governor Baker signed the FY19 state budget that authorizes $4,907,573,321 in Chapter 70 education aid to Massachusetts school districts. This budget increases aid by $161 million or 3.4 percent over FY18. Every operating district is receiving at least $30 in additional aid per student, and 133 operating districts are receiving increases so that they can keep pace with increases in their foundation budgets.

Here are some of the key points about this year's funding:

• In response to the Foundation Budget Review Commission's (FBRC) report, the benefits and fixed charges rate was raised by 14 percent toward the total recommended increase.
• Also in response to the FBRC report, English language learner (ELL) rates were converted to an increment for each grade level category and these increments were increased to close the gap between prior rates and the new ELL targets by 65 percent.
• Economically disadvantaged enrollment continues to be used in lieu of free and reduced price lunch data, which is no longer available for all districts as a result of districts' participation in the USDA's Community Eligibility Program.
• This year the state is also providing $11,850,000 out of a total $12,500,000 appropriation in transition aid for 11 districts significantly impacted by the change from free and reduced price lunch counts to the economically disadvantaged measure. The remaining $650,000 is being reserved to provide transition relief to significantly impacted charter schools.

This past July, the Department staff were actively engaged by the legislative conference committee that was considering statutory changes to Chapter 70 in order to provide technical support and financial projections needed by the committee to inform their deliberations. Ultimately, the conferees were not able to resolve their differences, but it is clear that there is a high level of interest in exploring long-term, statutory changes to the foundation budget in areas that had been addressed at varied levels of detail by the FBRC.

During the course of this consultative work, the Department modeled the impact of four types of changes to the formula:

• Raising rates for employee benefits and fixed charges toward goals based on FBRC calculations
• Raising special education rates and increasing special education assumed enrollment percentages
  • Raising rates for out-of-district special education toward FBRC goal rates to close gap with Circuit Breaker, which we modeled by setting the goal at 3 times the statewide foundation per pupil
  • Increasing percentages for assumed in-district special education enrollment toward FBRC goals of 4 percent for non-vocational students and 5 percent for vocational students
• Establishing ELL student increments consistent with the increments outlined in the FBRC report. The new ELL increments that we were asked to model for all grade levels was based on the difference between the ELL middle school rate and the non-ELL middle school rate that existed under the rate structure used through FY18.
• We were also asked to model various approaches to substantially increasing the increments associated with economically disadvantaged students based on the relative concentration of low-income students being served by particular districts.

Given our experience at the end of the legislative session and our continuing conversations with the Administration, we anticipate that we will be asked to provide substantial support to both the legislature and the Administration as they work on their respective legislative proposals as part of their FY20 budget development process. Most immediately, DESE will be actively working with the Executive Office of Education to model the impact of various possible changes to foundation budgets and related school finance programs and provide input on any related statutory language that might be required, as needed.

I will keep you informed on developments as we work with the Board's Budget Committee this fall to prepare the Department's FY20 budget recommendations.