The Foundation Budget is based on an algorithm that takes demographics into account. Demographic data is weighted depending on the amount of resources it is determined each type of child is considered to cost: elementary, secondary, bilingual, vocational, and poverty – defined as students eligible for free or reduced rate lunch, have different costs. The Foundation formula also looks at the ratio of residential and commercial property in each town. As costs rise, including costs of implementing Education Reform, the Foundation Budget is supposed to take these costs into account. At the inception of education reform, there was concern that by determining a Foundation Budget, communities that were already spending above this minimum would end up decreasing funding down to the Foundation Budget and thus the double-edged sword nature of instituting this measure. The goal for the Foundation Budget was to at least bring school districts up to the minimum and was not meant to decrease standards in towns that were contributing above Foundation. The Foundation Budget is thus analogous to setting a Poverty Line for a family. It is not meant to be the maximum amount of funding a school district should aspire to but a minimum bare bones standard.

After the state calculates what the municipality can afford, that amount is subtracted from the foundation budget and the remainder is contributed in Chapter 70 aid. Communities were required to contribute the difference between the Chapter 70 aid and Foundation, unless they were above foundation in the previous fiscal year. If the community was above foundation, they had to maintain their current level of spending on education, called “maintenance of effort.” Some municipalities (like Arlington) that had more than this amount of aid in FY93 were allowed to retain that aid, with a “hold harmless” provision, which did not permit aid to any community to be reduced. Arlington typically has received funds under the “Hold Harmless” provisions. However, the rules changed for FY04 and Arlington did receive a cut of 20% of the Chapter 70 aid.

Yes. Under Education Reform the state calculates how much a municipality can afford to contribute toward the foundation budget. So that communities do not reduce spending to the minimum foundation level required, there is a maintenance of effort requirement known as the Required Local Contribution (also known as the Net Minimum Contribution). Maintenance of effort means that districts are required to maintain level services from year to year. Combined with the Hold Harmless Provision (which meant that state aid would not decrease from year to year) the maintenance of effort requirement was designed so school districts would continue to provide services at least as good as provided in a prior year.

As Arlington’s enrollment has been consistently increasing since 1993, our Foundation Budget amount has been increasing and our Required Local Contribution has been increasing. However, even though enrollment increased in 2004 our Required Local Contribution did not increase; it actually went down slightly and our Chapter 70 aid did not increase in 2003 and took a big dive decreasing by $1.2M in 2004 because of the loss of the Hold Harmless provision. A full loss of Hold Harmless monies would mean a loss in excess of 40% for the Arlington Schools (compared to FY02) plus a loss of 70% for our share of Minuteman aid.

Local aid is the money the state sends each community. It does not go directly to the schools. As part of computing the Local Aid formula, the state assumes that each town has an implicit tax rate of $6/$1000 of adjusted valuation in a community to be used for funding the schools. This implicit tax rate only takes house prices + income + demographics into account. It doesn’t take commercial taxes into account. So for communities without good commercial tax revenues, like Arlington, they are seen to be wealthier than they are. Currently we tax at $4/$1000 for the schools, so according to this formula Arlington is not making its full contribution to local aid.

For FY04 the rules changed. Any community with aid greater than the amount required to meet foundation lost either (a) the total amount above the aid required or (b) 20% of the Chapter 70 aid, whichever was less. For a detailed table of these numbers, see School Finance and District Support at http://finance1.doe.mass.edu/ and look for Arlington. Communities are no longer required to meet required Net School Spending (NSS), including the Maintenance of Effort, anymore this year. All communities must only meet the requirement to make the local contribution to the Foundation budget. Thus we could lose about $6M more in state aid and still meet state requirements. It is not clear if the changes in state funding is a permanent change or just for the FY04.

Also, this year, the Governor tried to eliminate the additional assistance account. Additional Assistance monies for towns came into effect in the 1980’s as a response to Proposition 2.5. These are monies that go to the 1/3 of communities that do not have extra revenues from growth. These are not monies required to help fund education. Eliminating Additional Assistance would have meant a loss of $7M for Arlington in one fell swoop. Instead this account was cut by 20% this year, which was part of the total decrease of $3.2M in promised state funds for Arlington.

As a community, do we think 1993 is the ideal picture of Arlington and the goal we want for our school funding? Or have things changed in the past 10 years since we have been implementing Education Reform standards? Do we want to maintain these changes or do we want to decrease our services to levels below that of 1993? Is that a good benchmark? As we have been consistently spending $1.5-$4M above required NSS since 1996, it seems that it costs more to provide an education as mandated by Education Reform. Perhaps 2002 would be a better benchmark for Arlington funding taking into account the costs of implementing Education Reform. Are the real costs of a basic education being taken into account in the Foundation Budget figures? Are expensive special needs costs being taken into account adequately in the Formula? These questions are being investigated in the current Hancock court case (see below).

We can use our local planning and tax policy to shape our future. Here are some scenarios:

1. Rezone to allow higher density so we can collect taxes of new growth and move towards being more like Cambridge.
2. Raise taxes through an override, H1215, or increased state revenues sent back here and maintain our current artsy trend more like Brookline.
3. Implement no new taxes, lose services and move towards being more like Chelsea.

Keep in mind that Arlington is already the 9th most densely populated community in Massachusetts.

Living within the limits of Proposition 2.5 doesn’t mean "living within our means" because our costs are rising at more than 2.5% per year. Can we hold onto what we have now? Must we slide down to the Foundation level budget or below? We are currently trying to hold onto essentials in our schools. We need the legislature to understand that adequate, equitable and reliable school funding is more important than Proposition 2.5 or any "no new taxes" pledge.

In the past 10 years housing assessments within 128 have skyrocketed so towns in this region look wealthier and look, according to the Local Aid formula, like we can afford to pay higher property taxes. We are already a lean town and now we are cutting essential services. The Local Aid formula doesn’t take commercial taxes into account, only demographics and property values.

In addition, urban and suburban communities are in conflict over how the Chapter 70 formula should be weighted. Urban communities want Chapter 70 to depend more on poverty. Suburban communities want growth to be magnified in to the formula immediately so they can reap it now rather than delay. Arlington is both a low growth community and is not one of the poorer communities, thus we do not have a large voice in how the funding formulas are determined. Low growth communities with a small commercial tax base, like ours, are helped by Additional Assistance monies. It would be more equitable if the implicit tax rate used in the Local Aid formula took commercial taxes into account, but most communities, such as Burlington with its high commercial base, do not want this change. As we are in a minority of communities that are being squeezed in this way it will be difficult to alter the way the state disburses its increasingly limited funds in our favor.

There are several resolutions in the pipeline.

First the Arlington School Committee has passed a resolution to educate our legislators, which is being considered by the Massachusetts Association of School Committees in November. Basically this resolution states that Chapter 70 aid has been cut across the state, the state has reduced other grants and funding for the public schools, municipalities are constrained in how they raise revenues, the property tax levy is constrained by 2.5%, and the cost of maintaining level services often exceeds funds available under 2.5%. In other words, state funding has decreased, municipalities are constrained by Proposition 2.5 and other revenues they have access to, but the cost of services has increased greater than 2.5%. Federal and state mandates on schools have increased and the state has established an implicit tax rate that a community must contribute as a basis for minimum contributions to the school and for state aid, yet 27 school districts received appropriations in 2002 less than the minimum local contribution established by Ed. Reform.

Therefore, the Massachusetts Association of School Committees advocates for reforming the structure of school and municipal finance and urges:

• legislation to automatically increase the municipal levy limit in the amount of decreases in local aid accounts.
• legislation exempting implicit tax rate and minimum local contribution from levy limit as long as that amount was used for public schools.
• legislation permitting school committees to place Prop 2.5 override on municipal ballot.
• legislation that would expand the authority of municipalities to raise revenues other than property taxes and vehicle excise tax.
• legislation that would move funds from other local aid accounts to Chapter 70 accounts in municipalities that fail to meet state mandated minimum local contributions.

Second, our local legislature has offered a bill, HR1215, which would allow school districts to increase the levy limit outside of the bounds of Proposition 2.5. This allowable increase would be computed by taking the Minimum Required Local Contribution and subtracting the amount of the Required Local Contribution set in 1993. Thus if state monies are decreased, the town would have the taxing authority to make up the difference if it impacts what the schools require. This would keep the Maintenance of Effort funds in the local school budgets enabling the taxing authority to keep from falling to Foundation Levels. Conversely, if state aid increases the levy limit can go down. If we had this this year, we would have had the authority (but probably not the desire) to increase taxes by up to $6M to meet the Required NSS. The state constitution requires the state to provide funding or an equitable mechanism for that funding. This bill would give Town Meeting the authority to raise the levy limit. However HR1215 is not likely to pass.

Finally, the Hancock case might force the state to live up to its obligation to “cherish schools” and provide fully funded schools to meet the frameworks of Education Reform (see below). In addition, Charlie Lyons has suggested the possibility of Arlington and similar communities filing an amicus brief laying out the inequity Arlington and other residential towns experience under the current funding mechanism.

The 1993 Education Reform Act was a result of the McDuffy court case decision. The Supreme Judicial Court of the Commonwealth of Massachusetts, lists seven capabilities that each child must possess. Those capabilities are, “ (i) sufficient oral and written communication skills to enable students to function in a complex and rapidly changing civilization; (ii) sufficient knowledge of economic, social and political systems to enable students to make informed choices; (iii) sufficient understanding of governmental processes to enable the student to understand the issues that affect his or her community, state and nation; (iv) sufficient self-knowledge and knowledge of his or her mental and physical wellness; (v) sufficient grounding in the arts to enable the student to appreciate his or her cultural and historical heritage; (vi) sufficient training or preparation for advanced training either in academic or vocational fields so as to enable each child to choose and pursue life work intelligently; and (vii) sufficient level of academic or vocational skills to enable public school students to compete favorably with public school students in surrounding states, in academics or in the job market.” The state devised seven curriculum frameworks to meet these capabilities.

As a result of legal filings for the current Hancock v. Driscoll lawsuit and other cases related to public education, the standard by which the Commonwealth will be judged for the Hancock case is the State’s seven curriculum frameworks. This means that the state must demonstrate that children are receiving an adequate education in all of the areas covered by the frameworks, including the following basic subject areas and all of the components defined within each framework. These frameworks are: Arts, English Language Arts, Foreign Languages, Comprehensive Health, Mathematics, History and Social Science, Science and Technology/Engineering.

The plaintiff's case argues that the state’s per pupil foundation level of support is several thousand dollars short of the amount of money needed to provide an adequate education to students, an education that meets the state’s constitutional standard. For more information, go to Good Schools for Massachusetts

We can pressure our local government to increase revenues locally or we can accept a decrease in school services.

We can support our local legislators Senator Bob Havern, and House Representatives Jim Marzilli, Jay Kaufman, and Anne Paulsen as they are at the forefront working towards increasing state revenues.

We can join with other communities and support their efforts to convince their legislators to support state revenue increases.

We can keep close tabs on the Governor's plans for next year's budget to be released in January. We can complain loudly if we hear that his new budget will cause Arlington more fiscal pain. We can then keep an eye on the House Budget to be released later in the Spring and make sure it is equitable to Arlington.

We can keep informed on the Hancock case at Good Schools for Massachusetts and on the budget at Massachusetts Budget and Policy Center and other official sites.

We can also look into using the Homestead Exemption law in Arlington by introducing it into Town Meeting this year. This would be a way to shift the property tax burden in town onto houses assessed at a higher value and hopefully protect those least able to afford any proposed future property tax increase.