MTA analysis of the Senate FY2019 budget
The Senate passed its version of the fiscal year 2019 annual state budget on May 25, 2018. The proposal, known as Senate Bill 2530, allocates $41.49 billion in spending, an increase of approximately 3 percent over the current fiscal year, roughly $590 million more than Governor Charlie Baker proposed in his FY19 budget and $425 million more than the $41.065 billion allocated in House budget. Now that both the House and Senate have passed their versions of the budget, each chamber has appointed three members to serve on a conference committee charged with reconciling the differences between the two spending proposals. Lawmakers will aim to have a final FY2019 budget signed into law by the governor prior to the beginning of fiscal year 2019, which begins on July 1.
Chapter 70 Funding
S.2530 proposes increasing Chapter 70 aid by almost $162 million over FY18. This amount represents a $23.5 million increase over H.4401 and a $57 million increase over H.2, when funds allocated to the foundation reserve, known as the “pothole fund,” are taken into consideration.
Funding for the Special Education Circuit Breaker was increased by $38.1 million over FY18, $19.1 million more than was allocated in H.4401 and $28.1 million more than was included in H.2. The circuit breaker program reimburses districts for high-cost special education students. “High cost” is defined as four times the state average Chapter 70 foundation budget per pupil. The state is supposed to reimburse districts for 75 percent of prior-year costs above this threshold.
Charter School Reimbursement
State funding for charter school reimbursements was increased by $19.5 million over FY18 and H.2 funding levels and is $10 million more than what was included in H.4401. In FY18, this amount was less than half what was needed to fully fund this program. Under S.2530, the reimbursement program is still underfunded by $71 million (over 40 percent). Under current statute, communities receive tuition reimbursement for any increase in tuition paid to charter schools over the previous year. That reimbursement is 100 percent of the increase in the first year and then 25 percent of the increase for the next five years. It is important to note that these reimbursements are subject to appropriation and that in the past several years, districts have not received the full amount owed to them because of insufficient state funding.
A number of months ago, the state Secretary of Education announced the launch of a new early college initiative. The governor funded this new program at $3 million in his budget. S.2530 allocates $1.75 million for the initiative. H.4401 did not provide funding for this program. The MTA will urge legislators to oppose this measure in conference committee.
Funding for MCAS administration is increased by $100,000, which is substantially less than the $5 million increase included in H.2 and H.4401. A proposed amendment to the Senate budget would have matched this $5 million increase, but it was defeated on the floor.
Regional School District Commission
S.2530 calls for the creation of a special commission to review the financing, operation and regulation of regional school districts. The commission will issue recommendations for improvements. The commission would consist of 15 appointees, including one representative of the MTA, and would be required to hold its first meeting no later than Sept. 1.
Chapter 70 Local Contribution Commission
S.2530 also calls for a commission to study the adequacy of the local contribution component of the Chapter 70 formula. The commission would be required to hold at least four public hearings prior to releasing its findings and recommendations, which would be due by no later than Oct. 1, 2019. The MTA would have one representative on the commission, which would consist of 21 members.
Non-Chapter 70 Education Programs
S.2530 makes a number of changes to non-Chapter 70 education programs.
Programs receiving funding increases in S.2530:
- Teacher Certification Retained Revenue — $121,104
- School-to-Work Connecting Activities — 1,346,000
- Regional School Transportation — $7,357,679
- Charter School Reimbursements — $19,500,000
- METCO — $1,540,000
- English Language Acquisition — $694,508
- Adult Basic Education —$3,717,622
- YouthBuild Programs — $650,000
- Literacy Programs — $329,319
- Non-resident Transportation to Voc-Tech Programs — $7,500
- School Lunch Public — $10,000
- Mentoring Matching Grants — $275,000
- Center for Collaborative Education — $200,000
- After-School Programs —$123,009
- Innovation Schools — $35,000
Programs level-funded in S.2530:
- Expanded Learning Time Grants — $13,975,592
- Transportation of Homeless – $8,099,500
- Advanced Placement Math and Science Programs — $2,592,809
- School Breakfast Program — $4,666,445
- Regionalization Bonus — $56,920
- English Language Learners in Gateway Cities — $250,000
Programs receiving funding cuts in S.2530:
- Targeted Intervention (Partnership Network) — $296,226
- Institutional Schools — $37,342
- Department Operating Budget —$645,022
- Impact Aid Shortfall Mitigation – $100,000
Programs eliminated in S.2530:
- Safe and Supportive School Grants — $500,000
- Intensive Support for Low-Scoring Districts — $700,000
- Bay State Reading Institute — $339,500
Taking into account tuition remission to the state, S.2530 includes a 2.3 percent average increase for higher education operating budgets over FY18, including a 1 percent increase to UMass, 3.9 percent increase to state universities, and a 3.1 percent increase to community colleges. State university and community college appropriations are higher than the funding included in H.4401 and H.2, while UMass funding is $250,000 more than what was allocated in H.2 and the same as the amount appropriated in H.4401.
Group Insurance Commission Funding
Funding for GIC operations and premium plan and costs accounts are the same in S.2530, H.4401 and H.2.
Premium Contribution Split
S.2530 does not seek to change premium splits for active or retired state employees.
Sick Leave Accrual
S.2530 does not include language that would cap the accrual of sick leave for state employees. However, the budget did include language authorizing a sick time working group charged with analyzing the impacts of implementing a vacation and sick leave credit cap for state employees. The MTA will urge legislators to oppose this provision in conference committee.
State Pension Fund Contributions
S.4 appropriates $2.608 billion to cover the state’s pension liabilities, as required by law.
Cost of Living Adjustment (COLA)
S.2530 provides a 3 percent COLA on the first $13,000 in pension benefits for retired members of the state and teachers’ retirement systems.
Despite these increases, retiree pensions do not keep pace with inflation or the rising costs of health care.
S.2530 anticipates $41.724.4 billion in revenue, which represents a 3.5 percent increase over projected FY18 revenue.