July 28, 2022
On July 28, 2022 Governor Baker signed the FY2023 state budget that authorizes $5,998,209,887 in Chapter 70 education aid to Massachusetts school districts (7061-0008 and 7061-0009). This budget increases aid by $494.9 million or 8.99% over FY2022. Every operating district receives at least $60 in additional aid per student.
The FY2023 Chapter 70 program continues to implement the Student Opportunity Act (An Act Relative to Educational Opportunity for Students). The Act makes significant changes to the Chapter 70 formula, based in large part on the recommendations of the Foundation Budget Review Commission. The updated formula is also codified in Chapter 70 of the general laws.
The updated formula includes three parameters to be specified in each year's general appropriations act. These are specified as follows:
The Act establishes new, higher foundation budget rates in five areas: benefits and fixed charges, guidance and psychological services, special education out of district tuition, English learners, and low-income students, all to be phased in by FY2027. For FY2023, the rates have been increased by 2/6ths of the gap between the rates in FY2021—the base year used in the calculations—and the final target rates. The Act also increased the number of tiers used for the low-income increment rates from ten to twelve; districts with higher concentrations of low-income students benefit from higher rates.
In addition to these targeted rate increases, foundation budget categories are also increased to account for inflation. A new employee benefits inflation rate is applied to the employee benefits and fixed charges category. This is based on the enrollment-weighted, three-year average premium increase for all Group Insurance Commission plans; for FY2023 the increase is 4.51%. An inflation rate of 4.50% is applied to all other foundation budget rates, based on the U.S. Department of Commerce's state and local government price deflator and capped at the 4.50% maximum set in the Act. The Act does not set a maximum for the employee benefits inflation rate.
Statewide, foundation enrollment decreased from 907,506 in FY2022 to 903,751 in FY2023, a decrease of 3,755 or 0.4%. Foundation enrollment decreased for 153 districts, while 27 districts experienced enrollment increases of greater than five percent.
Finally, the formula's minimum aid provision guarantees all districts receive at least the same amount of aid in FY2023 as they did in FY2022 plus at least $60 per pupil.
The Act reinstates the definition of low-income enrollment used prior to FY2017, based on 185% of the federal poverty level. It replaces the economically disadvantaged designation (based on 133% of the federal poverty level) used from FY2017 through FY2022. For FY2023, a district's low-income enrollment is based on three eligibility categories:
Statewide, low-income enrollment for FY2023 is 407,501, compared to 382,088 in FY2022, which included students matched through direct certification or an estimated student count based on FY2016 low-income enrollment.
The Act also increases the assumed in-district special education enrollment to 5% for vocational students and 4% for non-vocational students. In FY2023, these assumed rates have been increased by 2/6ths of the gap to 4.86% and 3.86% respectively.
The aggregate wealth model that has been used to determine local contribution requirements since FY2007 and that is now codified in the Act remains in place. For municipalities with required contributions above their targets, the equity component of the formula sets their contributions at target.
Finally, pursuant to its codification in the Act, a provision introduced in the FY2020 budget specifying a minimum required local contribution of 82.5% of foundation for any city or town with a combined effort yield greater than 175% of foundation is continued in FY2023.
Foundation tuition rates for Commonwealth charter schools are based on the same foundation budget rates used in Chapter 70. The foundation budget rate increases being implemented in FY2023 have been incorporated into our projected FY2023 tuition rates. In addition, charter school low-income enrollment for FY2023 has been identified using the same eligibility criteria used for districts. The facilities component of the tuition rate is $1,088 per pupil, up from $938 per pupil in FY2022, with this cost fully reimbursed by the state as in prior years.
The reimbursement formula for transitional aid to districts reflects the change enacted by Section 38 of the FY20 budget, with an entitlement of 100% of any tuition increase in the first year, 60% in the second year, and 40% in the third year. Funding for first year reimbursements is prioritized first, followed by funding for second year reimbursements.
The Act requires 75% of the total state obligation to be funded in the first year, 90% in the second, and 100% in subsequent years. The FY2023 budget includes an increase of $89.2 million over the FY2022 GAA for Charter School Tuition Reimbursements (7061-9010) to $243.8 million. This appropriation level is expected to meet or exceed the 90% requirement when tuition assessments are updated to reflect actual enrollments and district spending levels. The projected assessments and reimbursements for charter tuition payments at this point in time can be useful for budget planning but should not be viewed as final numbers.
DESE has prepared the following materials to assist local officials in understanding the state aid calculations and local contribution requirements in this year's Chapter 70 program:
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
PowerPoint, describing the major components of the formula
White paper, describing the major components of the formula in greater detail
Complete formula spreadsheet, showing the detailed calculations for each municipality and district
Questions about the Chapter 70 program should be directed to:
Rob Hanna 781-338-6525
Rob O'Donnell 781-338-6512
Last Updated: October 7, 2022
Massachusetts Department of Elementary and Secondary Education 135 Santilli Highway, Everett, MA 02149
Voice: (781) 338-3000 TTY: (800) 439-2370
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