The Massachusetts Board of Elementary and Secondary Education
Potential Budget Priorities for FY 2012
This memorandum is written to reflect the discussion of the budget committee that took place on October 7 and to serve as background for the Board discussion during our October 19 meeting. Based upon our initial budget committee meeting, I am proposing potential priorities for your consideration.
Several touchstones frame discussions regarding the Board's FY 2012 budget recommendations:
- The FY 2012 state budget is likely to be the most challenging that both the state and local school districts will have faced, with a revenue shortfall of up to $2 billion compared to the current (FY 2011) budget.
- Approval of Question 3 (Sales and Use Tax Rates) in November would reduce state revenues by an estimated $2.5 billion.
- In light of these projections, I am concerned about the ability of the Commonwealth to fund local school districts in FY 2012 at least at the level of the current year.
- I believe that identifying a smaller rather than larger number of key areas that will help us to close proficiency gaps and improve student achievement statewide increases the likelihood that these areas will receive consideration.
- The Department of Elementary and Secondary Education must have staffing levels sufficient to provide leadership in closing proficiency gaps and improving student achievement statewide, as well as to manage the programs for which we are responsible.
All but the final set of considerations were discussed during the October 7 budget committee meeting:
Secure funding for local school districts: Two budget lines provide the bulk of state funding for local school districts - 7061-0008, Chapter 70 foundation aid, and 7061-0012, the special education "circuit breaker" reimbursement program. In the current year, foundation aid is supplemented by approximately $200 million in federal ARRA stimulus funds and the circuit breaker is supplemented by approximately $100 million in federal ARRA Individuals with Disabilities Education Act funding. Short of a new federal stimulus package, the federal funds are no longer available after the current (FY 2011) year.
Support maintaining foundation level funding for local school districts: Maintenance of foundation level spending in all districts is an important element in meeting the Commonwealth's obligations under the Massachusetts Constitution, as defined by the Supreme Judicial Court in the 1993 McDuffy decision.
Restore funding of the circuit breaker program to pre-ARRA levels: Under the circuit breaker program, the state target is 75 percent reimbursement for the cost of special education placements that exceed a minimum threshold. Cuts in FY10 and FY11 left reimbursement rates in the 40-45 percent range, but the availability of federal stimulus funds targeted to special education has helped offset the loss. The state appropriation will need to be restored to pre-ARRA levels if the state is to fulfill even close to its 75 percent share.
Reinstate the MCAS history and social science test requirement: The Massachusetts Education Reform Law of 1993 requires students to meet state standards in history and social science as one component of the competency determination to earn a high school diploma. In February 2009 the Board voted to waive its competency determination regulation on the history and social science requirement for students in the classes of 2012 and 2013, due to budget constraints.
Secure funding to restart the history/social science tests (account 7061-9400): Funding to reinstate this requirement is estimated at about $2.5 million to cover the costs to construct, administer, score and report results for history and social science tests in grades 5, 8, and 10 in FY12. I am recommending restoration of the tests contingent on continued funding of the cost for history/social science tests in FY13 and beyond.
Make implementation of the history/social science component of the competency determination contingent on increased academic intervention funding (account 7061-9404): Increases in accountability that are paired with increased support offer the greatest potential to result in increased learning. Increasing funding of the academic intervention line in FY13 and beyond will provide districts with the funds to assist students in meeting the higher expectations for high school graduation.
Increase funding for English language learner programs (account 7027-1004): English language learners (ELLs) are one of the few student groups that are growing in enrollment. More and more school districts are educating ELLs. As recommended by the Proficiency Gap Task Force, additional funding is needed to ensure that educators receive the training they need to work with ELLs and that programs are available to help students learn English. This line item was funded at $471,000 in FY09, and was reduced to $365,000 in FY11.
Consolidated literacy line item (account 7010-0033): In FY09 the three literacy line items were separate appropriations, totaling $6.67 million. In FY10 we recommended consolidating those items in order to provide greater flexibility in achieving statewide literacy goals. The items were consolidated in FY10, but the total was cut by nearly 36 percent to $4.2 million. In FY11 the line item was again split into the three FY09 literacy lines. I recommend reinstating the consolidation and requesting additional funding to rebuild our literacy efforts.
Ensure DESE capacity to close proficiency gaps and manage programs: A sound staffing infrastructure is essential to ensuring the Department's capacity to close proficiency gaps and manage for results. To this end, I am proposing three priorities:
Create dedicated funding for administration of the charter school program: Currently the charter school program's administrative costs are funded out of several Department accounts, including the main administrative account and the accountability and assistance line. As a result, keeping up with the growing demands on charter school administration is contributing to deficits in both the main administrative account (which is meant to cover central agency functions as well as rent for our building) and the accountability and assistance line. Given the high visibility of the charter schools initiative and the increase in responsibility for authorizing new charters under the legislation enacted in January 2010, I recommend that separate and distinct funding of the necessary administrative support costs be provided./
Increase funding for School and District Accountability and Assistance (account 7061-0029): In FY09, the Legislature dissolved the Office of Educational Quality and Accountability (EQA) and the Education Management Audit Council and shifted the responsibility for review of district performance to the Department of Elementary and Secondary Education. Before the transfer of responsibility, this initiative was funded at about $3 million; FY11's funding level is $939,000. The Department was able to complete 15 district reviews in 2008-2009, but is expected to complete 40 districts annually thereafter. I continue to have concerns about the adequacy of the current level of funding to perform the necessary audits and recommend requesting additional funding in order to accomplish this requirement.
Increase funding in the main administration account (account 7010-0005): The main administration account pays only for staff salaries and approximately $5 million for fixed costs (building lease and initial furniture payments financed over time) that cannot be reduced. Due to budget cuts this year, the Department experienced a $1.3 million shortfall in the main administration account and had to reduce the number of employees through voluntary and involuntary layoffs and retirements. The Department recently received new multi-year federal awards totaling over $500 million under Race to the Top and other grants for which we have new grant management responsibilities, but administrative support services cannot be charged directly to these federal programs. These high visibility programs will have a significant impact on our ability to accomplish overall K-12 goals.
The lack of administrative funding to properly support fundamental services (e.g., administering grants and their timely distribution to cities and towns, conducting financial oversight of the effective use of grants, meeting our statutory responsibilities to investigate educator misconduct, and so on) will hamper our ability to accomplish the goals of the Board and the federal award initiatives and timelines. Given the amount of federal grant funding that the state has received (which will provide over $360 million in local funding to support local school improvement efforts) the Department will need additional administrative funding to support these programs.
We estimate the cost of charter school administration to be approximately $1.25 million. An additional $1 million is required to adequately support accountability and assistance, including the conduct of district reviews. These needs could be addressed either by (a) creation of dedicated funding for charter school administration and an increase in the accountability and assistance account (7061-0029) while maintaining the main administration account at the FY11 level or (b) an increase of $2.25 million in the main administration account over the FY11 level. Either scenario would provide essential additional funding and likely would render the main administration account adequate to support the Department's fundamental services and infrastructure in FY 2012.
Two additional considerations: There are two additional budgetary considerations that I am bringing to your attention. Each is an area that, if not sufficiently funded, has the potential to result in degradation of services: for students in the case of special education in institutional settings for students and for educators in the case of educator certification. In each case, potential revenue sources are identified.
Increase funding for Special Education in Institutional Settings (7028-0031): This year the Department was able to cover, from a one-time funding source, $575,000 necessary for teacher salary increases related to services provided to students with disabilities within various state facilities. Additional funding is required to fund these expenses in FY12, either through an increased state appropriation, higher local contributions ("cherry sheet" deductions from cities, towns, and regional school districts that have students in these programs; the contributions go into the state's general fund), or both. Current local contributions are set at the level of average per pupil expenditure for the district and not at the cost of providing services for the student.
Increase funding for educator certification (account 7061-9604): The educator certification line funds the staff who oversee licensure functions (e.g., review of credentials, issuance of licenses). With a reduction of more than 25% since FY 2009 (from $1,860,686 to $1,367,409 in the current year), staff positions have been cut and processing times have increased. We are re-engineering processes to achieve greater efficiency, but this is unlikely to fully make up for reduced staffing levels. Further, for fiscal years 2005 through 2010, educator licensure fees have generated $16,119,500 total to the Commonwealth, for average annual revenue of $2,686,583. Not counting the revenue from FY 2009, a recertification year when there was a spike in renewals, annual revenue from licensure fees has averaged approximately $1.9 million. Restoration of the educator certification account to prior years' levels could be accomplished through Department retention of licensure fees - currently licensure revenue goes into the state's general fund - or through an increased appropriation, or a combination of both options.