Senate FY18 Budget Analysis
The Senate passed a budget totaling $40.8 billion for Fiscal Year 2018 on Thursday, May 25.
The House and Senate are appointing members to a conference committee led by the House and Senate Ways and Means chairs to hash out differences between the two chambers’ versions of the budget. The final product then moves to the governor’s desk before the start of the new fiscal year on July 1.
Below is a summary of key elements of the budget affecting public education.
K-12 Education
Foundation Budget Review Commission
The Senate budget lays the path for fully implementing the recommendations of the Foundation Budget Review Commission. The language would update the foundation budget, codify in the Massachusetts General Laws the Chapter 70 funding formula that has been in effect over the past decade, and require the state to develop a schedule, subject to appropriation, for funding the commission’s monetary recommendations. This policy is one of the goals of MTA’s K-12 policy bill, which is still awaiting a hearing.
Chapter 70 aid to municipalities and regional school districts
The budget proposes to increase Chapter 70 funding by $127.8 million over FY17, an increase of 2.8 percent. This increase fully funds the current foundation budget requirement for each school district and provides a minimum increase of $30 per pupil for every district.
This is the highest funding level for Chapter 70 of the three draft budgets presented to date. Last month, the House approved a $119 million increase, or 2.6 percent, and in January the governor proposed a $91.4 million increase, or 2 percent.
‘Low-Income Calculation’
The Chapter 70 aid proposal also addresses the ongoing issue of accurately counting low-income students, a shift made last spring for the FY 2017 budget. The Senate proposal provides $12.5 million for FY18 to mitigate the impact on districts and charter schools that would have received more funding under the previous counting method. The House also provided $12.5 million to mitigate the impact, but in the “foundation reserve” line item, rather than in Chapter 70 aid.
Beyond Chapter 70, the Senate keeps education grant programs on par with funding levels for the current fiscal year.
Student Test Data in Educator Evaluations
The Senate budget includes a provision that would eliminate the use of student test data in educator evaluations. This policy is one of the goals of MTA’s K-12 policy bill.
Recess
The Senate budget mandates 20 minutes of recess as part of the existing school day for students in grades K-5. This policy is one of the goals of MTA’s K-12 policy bill.
Unfunded Mandates
A provision in the Senate budget would allow local school districts to seek a waiver from any unfunded state mandates. The DESE would be required to grant the waiver unless it determines that “the absence of the mandate will lower the quality of education.”
Higher Education
Taking tuition remitted to the state into account, the Senate budget includes a 4.8 percent increase for higher education operations over FY17. This includes a 5.2 percent increase to UMass, 4.6 percent to state universities and 4.2 percent to community colleges. Funding increases proposed by the House and governor, which were identical, call for a 1.2 percent increase for higher education operations over FY17, including a 1 percent increase to UMass, 0.9 percent to state universities and 1.9 percent to community colleges.
Despite modest gains in the Senate budget compared to previous versions approved by the House and governor, underfunding of public higher education remains a perennial issue in the Commonwealth. To try to alleviate both the issue of campus funding (including benefits for employees) and high student debt, the MTA supports An Act investing in public higher education.
Employee Benefits
Health Insurance
Health insurance premium splits for state employees remain the same in the Senate budget.
Group Insurance Commission
The Senate adopted an amendment that makes important changes to the Group Insurance Commission. The provision creates two additional labor seats on the GIC commission, adding representatives from SEIU 509 and MOSES to the commission by removing two of the “public members” appointed by the governor. Second, it further clarifies the appointment of labor and retiree representatives. The Senate budget also adds a requirement that the GIC hold at least two public hearings prior to a board vote related to any plan design, cost sharing, deductible or other change that affects costs for state employees.
Sick Leave Cap
The Senate budget does include accrued sick time cap language for state employees. For non-collective bargaining employees, accrued sick time will be capped at 1,000 hours effective July 1, 2019. Collective bargaining unit employees will continue to accrue sick time through July 1, 2019. On that date, employees under 1,000 hours of accrued sick time will be capped at 1,000 hours. Employees with more than 1,000 will be capped at whatever their balance is on that date.
Line-of-Duty Benefit
The Senate budget also expands eligibility for benefits for those killed in the line of duty. A provision would make the family of “any public employee working for state or county government, a Massachusetts public higher education institution, a municipality, public school department, or public school district or public authority” eligible for the $300,000 benefit if the employee is killed during the course of work duties. Currently the benefit is only available to public safety personnel.
Pensions
Like previous versions of the budget, the Senate’s proposal provides a 3 percent Cost-of-Living Adjustment on the first $13,000 in pension benefits for retired members of the state and for those covered by teacher retirement systems.
Despite these increases, retiree pensions do not keep pace with inflation or the rising costs of health care. To help address this, the MTA supports An Act to provide fair and affordable public retiree benefits.
Taxes
The Senate budget includes a number of tax changes that would generate additional revenue for the Commonwealth. These include:
- $18 million from assessing the room occupancy excise tax on short-term rental platforms such as Airbnb.
- $30 million from amending the method of collecting from online retailers.
- $125 million from changing the due dates for tax remittance to the Commonwealth.
- $7 million from taxing internet “room resellers,” such as Expedia.
Tax Expenditure Review Commission
The Senate budget creates a new Tax Expenditure Review Commission charged with examining the effectiveness of various tax incentives and their impact on the economy and state budgeting. Massachusetts provides numerous tax breaks and deductions for businesses and individuals; all of these are listed in the state’s tax expenditure budget. Business tax incentives represent another $1 billion in revenue forgone each year. While it’s common for states to offer all types of tax incentives, Massachusetts is one of a shrinking number of states that have no mechanism to evaluate whether these breaks actually create the economic benefits intended.