Governor Jane Swift has filed Bill H1A - the administration's FY2003 budget proposal - with the legislature this week. Historically, the filing of the Governor’s proposed budget signals the first round of a lengthy process. Last year the debate over the budget lasted almost ten months.

In her proposed budget there are a number of issues important to school districts. As you can see from the details below, Chapter 70 foundation aid will increase, but other accounts are slated for reduction or consolidation. These cuts may force communities to make up the difference and eat into some of the Chapter 70 expansion. Still, it appears that the governor and key legislators remain committed to increasing state financial assistance to school districts, although the means of accounting for and appropriating the revenue will be subject for debate.

MASC will be analyzing further the fine print on the proposed budget over the next few days. Look here for updates and in your mailbox for legislative updates.

WHAT’S IN THE GOVERNOR’S BUDGET FOR EDUCATION
Chapter 70 - state foundation aid to school districts is increased by just over $100M. The Governor has proposed to file separate legislation to deal with Chapter 70 formula and has created a separate allocation on the cherry sheet titled hold harmless aid to ensure that no district receives less than in the prior year. This will take up about $30M of the $100M increase.

Transportation - has been level funded at the amounts appropriated in FY02 for both regular and regional transportation lines. All indications are that this will represent less than 25% reimbursement for non-regional districts and between 95% and 100% reimbursement for regional districts. There is a level of concern that Charter schools designated as "regional charters" ( there are currently nine ) may reduce the regional transportation line item reimbursement rate further.

School Building Assistance - first payments have been reduced for all categories. The $7.3M allocated for first payments for Category 1 (desegregation programs) will fund two of the 48 prioritized projects on the SBA list. The $13M allocated for Categories 2 & 3 will fund 17 of the additional 248 prioritized projects. No money has been allocated for emergency projects. The annual payments for projects has increased by approximately $55M to $365M.

Special Education - has had many line items consolidated into the implementation of the "circuit breaker" program. The Governor's budget proposes a $113M expenditure that is about $22M less than the Board of Education requested. The proposed budget eliminates former line items for SPED services for abandoned children and state wards as well as increased payments to two communities (Northampton and Framingham) for higher populations of hearing impaired children on the premise that these services are covered by the circuit breaker and by Chapter 70 per student allocations.

Charter School reimbursements - are reduced by more than $15.5M to $17.2M. Under the current three-year reimbursement formula that calls for 100% for the first year, 60% for the second year, and 40% for the third year, the DOE estimates it would need more than $50M for FY03. The $17.2M is proposed to be distributed for first year students only and at a rate of 33%. We are concerned about the impact of underfunding this account and the impact for communities that may have to make up the difference.

Class size reduction - grants will be distributed on the cherry sheet and the funding is reduced by $8M to a $10M allocation.

Office of Education Quality and Accountability will take over all monitoring functions and their budget has been set at $3.4M and placed outside the DOE budget.

Student Assessment and MCAS support both received nominal budget increases.

Certificate of Occupational Proficiency received no funding for the second year in a row.

Teacher Quality - through the attracting excellence to teaching program and teacher certification programs were level funded. The Board of Education's request for $6M for the Tomorrow's Teachers scholarship program was not funded.

Categorical Grant Programs - have seen a reduction in the number of programs and line items. Metco funding is reduced by $1M from FY02 to $14.1M. The two items that make up Chapter 636 funding (Magnet Education and Equal Education) received no funding. MASC has lobbied to protect both Metco and desegregation accounts and to restore the full appropriation for the past two years.

School to Work programs are consolidated into the work based learning program and funded at $6.6M.
The PALMS Math and Science program does appear to have received any funding. Early Childhood grants were reduced by $2M to $101.7M and Kindergarten development grants are reduced back to FY01 level of $28M. Early literacy, Head Start and tutorial grants are level funded at FY02 appropriations. Health education, home based parenting, dual enrollment, after school programs, Alternative education, advanced placement, gifted and talented, and grants for advanced students have all seen their line items eliminated and a new line item - Education Opportunities Grant Program - has been added and funded at a level of $10.5M. This is much less than the total allocation in FY02 to the consolidated lines and $6.9M of the new line is earmarked for particular programs.

WHAT HAPPENS NEXT
H1A having been filed with the House of Representatives will go to the Ways and Means Committee where members will prepare their own version of the state budget for floor debate. The House iteration may not be ready until April or May. They the Senate will debate the budget, most likely a creation of the upper house’s Ways and Means Committee. Depending on the number of differences, the reconciliation process may be a lengthy process, possibly extending into July or later.

A critical factor is the economy. If the recession abates and state revenues increase, the state aid picture may become more favorable. If not, lawmakers may need to rethink their priorities across the board.