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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