FY04 House 1 by gah31J

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									LOCAL AID
What’s in House 1:
Reductions with Reform



             March 4, 2003
 Local Aid Components
FY03                          FY04                          FY05

Chapter 70, SBAB, SPED,       Chapter 70, SBAB, SPED,       Chapter 70, SBAB, SPED,
transportation, class size,   transportation, class size,   transportation, class size,
other education aid           other education aid           other education aid

Lottery                       Lottery                       Lottery


PILOT (5% funded)             PILOT (80% funded)            PILOT (100% funded)


Additional Assistance         Transitional Mitigation       Transitional Mitigation
                                                            (multi-year phase-out),
                                                            Housing Incentives
Quinn, libraries, other       Quinn, libraries, other       Quinn, libraries, other




                                   BOLD = Section 3
Local Aid Components

 All Local Aid FY03 vs. FY04 (millions)
                                      FY03
                                    Spending    FY04
                                    (after 9c) House 1         Change

 Chapter 70                               3,259      3,332          73
 Lottery                                    705        419        (286)
 Additional Assistance                      405        -          (405)
 Transitional Mitigation                    -          293         293
 PILOT *                                      10       173         163
 Class Size Reduction                         18       -           (18)
 Total Section 3                         4,397      4,217        (180)
 Other education aid                        661        631         (30)
 Other aid                                  248        226         (22)
 TOTAL all Local Aid                     5,306      5,074        (232)

 * PILOT not Section 3 in FY03; included for comparison only
Education Aid
                                   FY03
                                 Spending    FY04
                                 (after 9c) House 1 Variance
Chapter 70                            3,259   3,332       73
Class Size Reduction                     18     -        (18)
Other education **                      661     631      (30)
TOTAL                                3,938   3,963       25

** Other detail
Major Increases:
School Building Assistance             383     408        25
Special Education                       71     115        45
Low Scoring Student Support             50      53         3
Low English Proficiency Grants         -         9         9
Major Decreases:
School Transportation                   94       21       (73)
Kindergarten/Other Grants               36      -         (36)
All other                               28       25        (3)
                                       661     631       (30)
Other Programs
   All other local aid programs account for
    $226M, 4.5% of FY04 total local aid

    Other Local Aid (millions)
                                         FY03
                                       Spending    FY04
                                       (after 9c) House 1 Variance

    Major Increases:
    Police Career Incentive Payment          42       45        3
    Major Decreases:
    Smoking Prevention/School Health          23       5       (18)
    All Other                                183     176        (7)
                                            248     226       (22)
Local Aid Principles
   Education is first priority
    •   100% of foundation for all school districts
    •   Assist districts without sufficient tax base
    •   New incentives, increased SPED funding
   Formula-driven fairness
    •   PILOT (Payment In Lieu Of Taxes)
    •   Updates with current data
    •   Cut paperwork (no grant applications)
   Smooth transition
Local Aid Principles

   Why not across the board?
       Hits hardest those who depend
        most on state aid
       Violates foundation budget
        commitment to education
       Perpetuates past inequities
Understanding Chapter 70

   Average cost per student (the
    foundation)

   Sharing the cost
    a) City or town
    b) State
Average per student cost

     Base cost per student up 3.3%:
      FY03=$5,325       FY04 H1=$5,500
     Adjusted for
      •   50% increase for low-income
      •   33% increase for English immersion
      •   33% credit for additional charter students
          (before tuition deduction), 3-year phase-out
      •   70% increase for vocational school students
      •   8.25% SPED factor (before additional SPED
          reimbursements)
     Average foundation
      FY03 $7,184 versus FY04 $7,391
Sharing the cost: local

Since 1993, based on prior year local
   contribution, adjusted for growth
   in municipal revenues (MRGF).
     MRGF is still the starting point
     H1 factors in adjustments for FY04
      state aid reductions.
Sharing the cost: local

    NEW H1 compares local school spending to the
     property tax base, adjusted for local median
     income

     New adjustment prescribes a minimum effort on
      education: $6.00 of tax rate
     • If local spending exceeds $6.00, then local
        contribution lowered
     • If local spending less than $6.00, then
        local contribution raised
Sharing the cost: examples

              FY04
              Change                                         FY04 H1
              in          Change in                          Total
              municipal   local        Tax                   change in
              revenues    contribution rate/     Change due Local
              (MRGF)      due to MRGF $1000      to Tax rate Contribution
 Abington        -0.83%       (78,651)    8.74      (579,191)    (657,842)
 Agawam          2.90%        542,845    10.45    (1,640,089)   (1,097,244)
 Barnstable      2.31%        998,529     5.41     1,189,005    2,187,534
 Fall River     -11.98%    (1,748,203)    5.40       368,525    (1,379,678)
Sharing the cost: state

Foundation cost per student
less local contribution = state share

     State pays minimum 12% of the
      foundation
     No locality responsible for more than
      88%
 Logic of Chapter 70 reform
        Equalized required contributions provides
         more aid to communities funding more
         than average share
        Eliminates unfairness caused by old 1993
         as base year data
        Establishes flexible, common standard of
         effort not based on historic distributions
        Establishes single factor ($6.00 tax rate) to
         calculate share of education spending

To learn more about Chapter 70 changes, and to see the calculations
used to determine Chapter 70 aid for your city or town, go to
http://finance1.doe.mass.edu/chapter70/chapter_04p.html
Regional district reform

   FY03: regional district aid had little
    connection to enrollment or foundation
   FY04 REFORM:
       Foundation budget fully-funded at local
        level for all students, including regionals
       Municipality transfers foundation budget
        amount per student to regional school
        district, based on enrollment
Education aid summary
             $4,500

                                    SBA
             $4,000
                                    SPED Reimbursements
             $3,500
                                    Low Scoring Student Support
             $3,000
                                    Transportation
$ MILLIONS




             $2,500
                                    Early Literacy

             $2,000                 Full-Day Kindergarten

             $1,500                 Class Size Reduction


             $1,000
                                    Other

                                    Regional Distributions
              $500

                                    C70
                $0
                      FY03   FY04
Major reductions

   Lottery reduced by 34% from FY03
   Additional assistance eliminated
PILOT     (Payment In Lieu Of Taxes)


   FY03: Based on value of state land only;
    $10m, not fully funded
   FY04: Based on value of all state property
    (excluding Higher Education, authorities,
    and hospitals), $173m, 80% funded
    • Tax value = square-footage x property tax rate
   FY05: 100% funded
Housing Incentives

   To be fully implemented in FY05
   Based on number of occupancy certificates
    issued in FY04
    • Includes all types of housing units
    • Includes rehabs and new starts
   $50M allocated; approximately $3,000/permit
    based on FY02 construction rate
Transitional Mitigation

   Established to offset impact of reform
   Will be phased out while PILOT and Housing
    Incentive program are fully phased in
   Distribution designed to ensure:
    •   No town cut over 10.5% of Section 3 state aid
    •   No town increase in state aid, except to reach
        foundation funding for education
Examples of changes
Fall River
 Section 3 comparison (thousands)
                                    FY03
                                  Spending       FY04
                                  (after 9c)    House 1     Variance

  Chapter 70*                        95,129       98,532        3,403
  Lottery                            20,692       13,696       (6,996)
  Additional Assistance               2,443          -         (2,443)
  Transitional Mitigation               -          4,579        4,579
  PILOT                                   42       1,146        1,104
  Class Size Reduction                  703          -           (703)
  Total, Section 3                 119,009      117,953       (1,056)

  *FY03 Chapter 70 figure includes estimate for Fall River’s share of
  regional Chapter 70 distribution.

  Fall River’s local contribution requirement for education will also be
  lowered by $1.4 million as a result of FY04 House 1 changes, helping to
  offset reductions in non-education state aid.

								
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