House budget proposal reflects deep economic crisis

On April 15, the House Ways and Means Committee released its version of the state budget for the new fiscal year that begins on July 1, 2009. The $27.4 billion plan makes severe cuts across the board. Unlike Gov. Patrick's proposal for FY10 (House 1), the Ways and Means proposal (H 4100) does not call for increasing revenues as a way to prevent service cuts.

According to the committee, the state is facing a budget deficit of at least $3.6 billion. This means that the state has to identify $3.6 billion more than it is projected to collect in revenues to keep programs funded at their current level. To make up this deficit, the House relies on federal monies from the American Recovery and Reinvestment Act (ARRA) -- of approximately $1.5 billion, cancels a payment of $97 million to the state's rainy day fund and reduces programs and spending by $1.8 billion. House 1, by comparison, uses money from the state's rainy day fund and proposes increasing revenues by about $500 million as a way to prevent some of the worst service cuts.

PreK-12 Education Funding
Unlike most programs which saw cuts, H 4100 level-funds Chapter 70 -- the major state funding source for local school districts -- at $3.9 billion. However, because both the governor and the House Ways and Means use ARRA education monies to ensure that all districts are funded at their constitutionally required level, the total of $4.1 billion will go to local school districts in FY10. The governor proposes using $168 million of the ARRA monies and H 4100 uses $184 million to bring school districts up to their required spending levels.

However, virtually no education grant program is spared from severe cuts. A total of $129 million is cut over FY09 which represents an almost 22 percent cut including the following:

  • Kindergarten Development Grants -- $27.8 million, down $6 million from FY09 and down $1 million from House 1.
  • Regional School Transportation -- $30.5 million, down $31 million from FY09 and down $23 million from House 1.
  • Special Education Circuit Breaker -- $184.9 million, down $45 million from FY09 and down $31 million from House 1.  Over two years, the ARRA is providing $280 million for IDEA, the federal SPED program, that can be used to offset some of this cut.
  • Alternative Education, Bullying Prevention programs and Leadership Academies for Principals and Superintendents are not funded at all in the House Ways and Means proposal.

ARRA funds may make up for a portion of these cuts, especially increased IDEA and Title I funds going directly to local school districts.

Local Aid
The major sources of non-Chapter 70 local aid (now combined and called "General Government Aid") are drastically cut by $424 million from FY09, a cut of over 32 percent. This cut is almost double that proposed by the governor in House 1. The governor proposed eliminating the telecom loophole and allowing communities to increase meals and hotel taxes as a way to make up for cuts in local aid. The House does not include this in their proposal.

In many communities, as much as half of local aid goes to help fund schools; therefore, this proposed cut in local aid will affect schools, as well as local services such as public safety.

Higher Education Funding
When the proposed allocations of ARRA funds are taken into account, the FY10 House Ways and Means budget proposal level-funds the University of Massachusetts and all state and community colleges at their original FY09 levels: 

  • $498 million for the University of Massachusetts
  • $223 million for the state colleges
  • $245 million for community colleges. 

Similar to the governor's recent proposal, the Ways and Means proposal relies on $159 million in funding from the ARRA to make up the difference between the state appropriation and level funding for FY10.

Compared to the governor, the House Ways and Means proposal makes additional cuts to other higher education line items, including $14 million from the Scholarship account, a 14.5 percent cut. The governor has level-funded this line item at $96 million, while House Ways and Means proposes to fund it at only $82.8 million. Some relief is available, as ARRA funding provides increases to Pell Grants and to Work-Study programs.

The House Ways and Means proposal also makes large cuts to state higher education administration, including an additional $3.4 million cut from House 1, for a total of $4.5 million from FY09, resulting in a proposed 69 percent cut for the Department of Higher Education.

Employee Benefits

Higher Education Health Insurance Premiums
State employees would see substantial increases in their health insurance premium shares.  All employees would pay 30 percent instead of the current 15 or 20 percent, which depends on the date of hire. For those hired before 7/1/03 that amounts to a 100 percent increase in what they are currently paying while those hired after 6/30/03 would see an increase of 67 percent. Depending on one’s date of retirement, health insurance premium splits for retired state employees remain at the same levels as in current law.

Retiree COLA
The COLA for retired teachers and state employees would be three percent calculated on a base of $12,000, or $360.