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Notes from Miniseminar with Paul Schlichtman in July, 2003 plus some other research I put in trying to give a somewhat comprehensive yet understandable explanation of where we are today with state funding in Arlington. Colleen Kirby Meeting with Paul Schlichtman July 2003 (Please note that many of the comments in this summary and illustrations are Colleen Kirby’s and are not direct quotes from Paul in any way-all errors in interpretation are solely my responsibility) Attendees: Colleen Kirby, Vicky Ford, Francesca Coltrera, Jan Stetson Background and Definitions In Massachusetts the state constitution which was drawn up in the 1700’s says that the state must “cherish schools” which has been taken to mean that the state is required to make sure the public schools are funded. The state was taken to court, known as the McDuffy case, and it was decreed that the state needed to provide sufficient, equitable and reliable funding to the public schools. Thus Education Reform was passed in 1993. It lists 7 key areas in which students must be proficient; frameworks to reach these goals were devised and include the arts, history and social science, mathematics, foreign language, English language arts, comprehensive health, and science and technology/engineering. Currently the Hancock case is a refiling of similar issues. It may show that Foundation Funding is inadequate to provide public school funding to meet these goals. To keep up with the Hancock case see http://www.goodschoolsformass.org The 1993 Education Reform Act determines a bare-bones Foundation Budget for each school district necessary to provide a basic education. The Foundation Budget algorithm was a good faith attempt to determine the costs of public education prior to Education Reform, it obviously was not based on the implementation of Education Reform, which followed. 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. As costs rise the Foundation Budget is supposed to take these costs into account. However it appears that the algorithm hasn’t been updated to include the costs associated with updating school districts to the requirements of Education Reform. The state also calculated how much a municipality could afford to contribute toward the foundation budget. 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. Municipalites (like Arlington) that had more than this amount of aid in FY93 were allowed to retain that aid, with a “hold harmless” provision that did not permit aid to any community to be reduced. 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.” 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. To guard against communities reducing spending to foundation, the Education Reform Act of 1993 includes in the Required Local Contribution (aka the Net Minimum Contribution) a maintenance of effort requirement. 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. Obviously the Hold Harmless Provision was neglected this year as our FY04 Chapter 70 funds decreased by over $1.2M from last year and maintenance of effort requirements were also abandoned in FY04, as all districts were allowed to fall to foundation. Maintenance of effort is what prevented municipalities from reducing spending to foundation (at least before FY04). For FY04 the rules changed. Any community that had aid above the amount required to meet foundation lost either (a) the total amount above the aid required to meet foundation in FY04 or (b) 20% of the Chapter 70 aid, whichever was less. For a detailed table of these numbers see Finance1.DOE.Mass.edu and look for Arlington. 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. The Maintenance of Effort and Hold Harmless provisions are much like the way divorce settlements are determined, rather than determining a single baseline level of funding a dependent spouse should receive it varies depending on the standard of living to which they were accustomed. Not honoring Maintenance of Effort and Hold Harmless this year is like reducing child support to a lower level because the paying parent now has a lower paying job (or because the paying parent is now hiding income from the authorities but paying for an overseas mistress instead). Please realize my analogies are meant for explanatory value only and are not perfect analogies in any way. Idiosyncracies of the Foundation Budget: it is usually two years behind on the data used (October 1 enrollment data for year X determines funding for year X+2). [In 2003, the formula counted kindergarten enrollee’s as half a person as only half day kindergarten is mandated by the state. In 2004, they were counted again as a whole enrollee. This is why enrollment figures bumped down significantly in Arlington in 2003 and then soared in 2004.] Required Net School Spending has been a consistent measure until 2004 when Hold Harmless was removed from the Chapter 70 disbursements. It is very important to keep in mind that Required NSS as a benchmark is no longer consistent with years pre-2004 since Hold Harmless has been removed. We are no longer required to meet Required NSS (including the Maintenance of Effort) anymore this year so all communities must only meet Foundation. Thus we could lose about $6M more and still meet state requirements. Is this going to be permanent or just for this year? Regional School districts (like Minuteman) are hit hard by the current formulas because the formulas have a time lag and enrollment numbers can change drastically from year to year. We pay 1/3 of Minuteman costs but get 40% of state aid that comes into Minuteman so we are more dependent on state aid which was cut by 20% for FY04. Arlington Specifics In Arlington, we have been consistently funding our schools at a level above the Required Net School Spending by $1.5M-$4.6M since 1996. If we start funding our schools at the Required Net School Spending level we will be returning the school system to pre-1996 funding levels. The FY2004 budget is not likely to be much above Required NSS and it is necessary to remember that Required NSS no longer includes the maintenance of effort requirements so the benchmark has dropped lower which is already a real loss in services. As our 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 FY 02) plus a loss of 70% for our share of Minuteman aid. So the question we are currently facing is, 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 the 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 may cost more to provide the education mandated by Education Reform. Paul would like to see 2002 used as a benchmark for Arlington funding taking into account the costs of implementing Education Reform. On the other hand, 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? Other costs? It is not easy to compare Arlington’s Actual Net School Spending with most other towns. Each town computes Actual NSS figures differently based on how they happened to be computing it in 1993. We are one of only 10% of all towns that included Health Care Costs and Pension Costs in the figure even though these figures are computed as part of the Town Fixed Costs and aren’t part of the school budget. This means it is difficult to compare NSS from one town with another. This is the reason it looks like we spend more than Belmont. Other information of interest: Local aid is the money the state sends each community. It is not direct school aid. 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 accout. 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. Could the state require communities to tax at the $6/$1000 rate for the schools? 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. . The Governor tried to get rid of the Additional Assistance account. This would have meant a loss of $7M for Arlington in one feel 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.
House Bill 1215 H1215. Minimum Required Local Contribution (RLC) minus the amount of RLC in 1993 computes the increase of the levy limit that a school district would be allowed if H1215 were law. Thus if state monies are decreased, the town would have the taxing authority to make up the difference. This would keep the Maintenance of Effort funds in the local school budgets enabling the taxing authority to keep from falling to Foundation Levels of funding without state aid. Conversely, if state aid increases the levy limit can go down. If we had this this year, we could have had the authority 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 will give Town Meeting the authority to raise the levy limit or not. You can’t go above the levy ceiling of $25/1000 assessed value. No towns are close to the levy ceiling. This is only of use to towns at the levy limit, which most towns are. It would be a longshot for H1215 to pass. See H1215 and MGL Chapter 59, Section 21C. Other Comments Our options for Arlington: 1. Rezone to allow higher density so we can collect taxes of new growth and move towards being like Cambridge. 2. Raise taxes through an override, H1215, or state income taxes sent back here and maintain our current artsy trend like Brookline. 3. No new taxes, lose services and move towards being like Chelsea. We are already the 9th most densely populated community in Massachusetts, with Winthrop being the only town more dense than us. Living within the limits of Proposition 2.5 doesn’t mean living within our means because costs are rising at more than 2.5% per year. Can we hold onto what we have now? Must we start sliding down to Foundation level budget or below? We are just trying to hold onto essentials. We need the legislature to understand that adequate, equitable and reliable school funding is more important than Proposition 2.5. In the past 10 years housing assessments within 128 have skyrocketed so towns in this region look wealthier and look, according to the 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, just demographics and property values but we don’t have the same resources to tax our base without those commercial monies. Urban communities want Chapter 70 to depend more on poverty-this won’t help Arlington as we have become less poor over the years. Suburban Coalition communities want growth to be magnified in to the formula immediately so they can reap it now rather than delay. This also won’t help Arlington as we are a low growth community. Low growth communities with a small commercial tax base are only helped by Additional Assistance monies. We need the implicit tax rate to take commercial taxes into account, but communities who get this benefit don’t want this change. There are a lot more communities like Burlington than like Arlington. 80% of our school budget goes for salaries. That is very efficient. Proposed Resolution passed by Arlington’s School Committee to be considered by MASC in November as a goal to educate our legislators: 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 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 minimum local contribution established by Ed. Reform. (includes Lowell, not Arlington) Therefore, the Massachusetts Association of School Committees advocates for reforming the structure of school and municipal finance and urges: 1. legislation to automatically increase the municipal levy limit in the amount of decreases in local aid accounts (such as H1215) 2. legislation exempting implicit tax rate and minimum local contribution from levy limit as long as that amount was used for public schools (also H1215?) 3. legislation permitting school committees to place Prop 2.5 override on municipal ballot. 4. legislation that would expand the authority of municipalities to raise revenues other than property taxes and vehicle excise tax. 5. 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. Appendix 1 From the Court Cases. The Actual wording of the Supreme Judicial Court decision listing the 7 capabilities each child must possess and the frameworks used to teach these capabilities: The SJC decision also listed seven capabilities that each child must possess. Those capabilities were, “ (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.” As a result of legal filings for the 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:
Finance Experts Testify - Jun 27, 2003 Nationally-recognized experts who testified earlier this week and are scheduled to continue testifying on Friday as part of the plaintiff’s case in the Hancock v. Driscoll public schools trial have estimated 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. |
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