FY20 Preliminary Chapter 70 Aid and Net School Spending Requirements

January 23, 2019

Pursuant to section 6 of Chapter 70 of the General Laws, the Commissioner of Elementary and Secondary Education is issuing the preliminary estimates of Chapter 70 school aid and net school spending requirements for FY20. These estimates are based on House 1, Governor Baker's proposed state budget for the coming fiscal year. The proposal increases aid to districts from $4,907,573,321 to $5,107,909,124, an increase of $200.3 million or 4.1 percent.

These are preliminary estimates subject to change as the House and Senate deliberate on the budget. Our purpose in providing these estimates at this time is to assist cities, towns and regional school districts in their budget preparations for FY20. We advise you to construct your local budgets with sufficient flexibility to accommodate the changes that typically occur in the state budget process. The Commissioner will issue the final, official school spending requirements as soon as the Governor and Legislature approve either the FY20 state budget or an earlier local aid resolution.

The House 1 budget proposal is based on An Act to Promote Equity and Excellence in Education, a comprehensive school finance bill being filed today by the Baker-Polito Administration. As described in more detail below, the bill implements the major recommendations of the Foundation Budget Review Commission (FBRC), incorporates other enhancements to the Commonwealth's school funding framework, and codifies the formula changes that have previously been implemented through annual provisions in the state budget.

The proposed legislation sets targets for changes to the foundation budget calculation, to be fully phased-in by FY26. Here is a summary of the proposals:

• The out-of-district special education tuition rate is raised consistent with FBRC recommendations. FY20 establishes a new goal at three times the FY19 statewide average foundation budget per pupil, to close the gap between the foundation budget (1x statewide average foundation budget per pupil) and the circuit breaker threshold (4x statewide average foundation budget per pupil). The FY20 rate represents one-seventh of the gap between the FY19 rate and the goal rate plus inflation.

• House 1 also initiates year 1 of a planned 6-year phase-in of increases to the benefits and fixed charges rate based on new goal rates derived from Group Insurance Commission (GIC) data. Consistent with FBRC recommendations, the goal rates account for GIC premium rates for both active and retired municipal employees. The legislation specifies that the goal rates will be updated annually to reflect changes in GIC's premium costs. House 1 builds on significant increases over the past two fiscal years and closes one-seventh of the gap toward the benefits goal rates in FY20, with one-fifth of the remaining gap to be closed in each of the next 5 years.

• For English learners, the Governor's proposal completes the expansion of overall rates begun in the FY19 budget, but takes a modified approach that responds to the FBRC recommendations:

  • English learner (EL) incremental rates are restructured to differentiate students by grade level. This substantially increases the increment for high school students, reflecting the additional challenges of learning a new language at an older age.

  • The foundation budget includes all students with low English language proficiency, as measured by the statewide ACCESS for ELLs test. Students who have already met or exceeded state exit requirements are no longer counted as EL students in the foundation budget calculation. This reduced headcount is mitigated by the increased rates.

• For economically disadvantaged students, also consistent with the FBRC recommendations, the Governor's proposal expands the foundation budget over 7 years and introduces a more progressive decile rate structure to the highest 5 deciles. Starting in FY20, there is also a new targeted high needs concentration increment for districts serving the highest concentrations of both economically disadvantaged and EL students in the Commonwealth. Eligible districts will receive this increment in addition to the regular economically disadvantaged and EL increments. At full phase-in, a decile 10 district receiving this additional increment will now be receiving a total increment increase of $4,782 per economically disadvantaged student (in FY20 dollars), compared to the FY19 decile 10 increment of $3,980.

• The Governor's proposal also introduces a new foundation budget rate for high school students in approved high quality early college and innovation pathways programs to encourage and support program expansion over the next 7 to 10 years. This new rate is set at $1,050 per student above the regular high school rate and is fully implemented in FY20 for students already enrolled in such programs as of October 1, 2018.

• Starting in FY21 and proceeding over the next 6 years, the Governor's proposal phases in new goal rates for the guidance and psychological services component of foundation budget for all districts to better reflect current and best practice staffing needs for additional student services related to school safety and climate, social and emotional supports, and career counseling for students.

• In FY26, following the completion of the employee benefits goal rate implementation in FY25, the proposal increases the assumed in-district special education enrollment rate from 3.75 percent to 4 percent of foundation enrollment for non-vocational students, as recommended by the FBRC.

• The legislation proposes a feasibility study of tiered vocational program rates in the foundation budget. Currently, all approved Chapter 74 vocational programs receive the same rate, even though the costs associated with each separate program vary widely. The study would also consider the feasibility of raising the school choice tuition rate, currently $5,000, for vocational students.

Other highlights of the FY20 program:

• The aggregate wealth model used in the formula since FY07 continues to be in effect. For municipalities with required contributions above their targets, the equity component of the formula is reduced by 100 percent of the gap.

• 141 operating districts receive foundation aid to ensure that they do not fall below their foundation budgets.

• The inflation factor for this year is 3.75 percent.

• Statewide enrollment decreased from 941,411 in FY19 to 939,683 in FY20, a 0.18 percent decrease; 8 districts saw their foundation enrollment increase by over 5 percent.

• Cities and towns with combined effort yields greater than 175 percent of foundation have required local contributions set at not less than 82.5 percent of foundation.

• The $11,850,000 in transition aid allocated in FY19 to 11 districts significantly impacted by the new economically disadvantaged metric has been added to the base aid of these districts.

• Minimum aid is set at $20 per pupil.

In addition to the changes to the Chapter 70 program described above, the Governor's bill proposes three other significant initiatives relating to school finance:

• The charter tuition and reimbursement program is significantly restructured:

  • Return to a 3-year, 100%/60%/40% schedule for transitional aid.

  • Transitional aid is more closely tied to enrollment growth.

  • Supplemental aid is provided to districts with high charter tuition costs and relatively low Chapter 70 aid, to ensure a minimum level of state support for charter tuition.

  • House 1 proposal is a $16 million increase over FY19 and represents the first year of a planned 3-year phase-in to full funding of the reimbursement program by FY22.

  • The facilities component of the charter school tuition rate is increased to $938 per pupil in FY20, the first such increase in more than a decade. The rate would be indexed to inflation in subsequent years.

• The unique fiscal challenges faced by many of our small, rural school districts is acknowledged. Declining student enrollment, limited municipal fiscal resources, and high transportation costs are all contributing to this growing problem.

  • The legislation proposes a special commission to consider and propose short and long-term solutions to this problem.

  • The small, existing "regional bonus aid" program is replaced by a broader grant program to support studies and transition costs for regionalization and other initiatives to enhance public education opportunities in our rural districts. A trust fund will allow appropriations to be carried across fiscal years, to enable multi-year commitments for state support.

• The Governor's budget proposal also includes a new trust fund of $50 million, funded with one-time revenue, to be used at the discretion of the Commissioner of Elementary and Secondary Education to help accelerate quality improvements in low-performing schools. This money is in addition to the Targeted Assistance funds that are set aside for struggling schools in an annual line item of the budget and funded at $26.5 million in FY20.

Here are links to more detailed information on the Baker-Polito Administration's Act to Promote Equity and Excellence in Education:

• Complete text of an Act to Promote Equity and Excellence in Education

• Section-by-section bill summary

• Summary chart showing foundation enrollment, foundation budget, Chapter 70 aid, and required local contributions for each school district

• Summary chart for regional school districts, showing foundation enrollment and required local contribution for each member of the district

• Complete formula spreadsheet, showing the detailed calculations for each municipality and district

• Preliminary FY20 Charter School Tuition and Enrollment

Questions about the Chapter 70 program should be directed to:

Rob O'Donnell
781-338-6512

Rob Hanna
781-338-6525

Last Updated: January 23, 2019