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School Finance: ESE Budget

FY13 State Budget Reductions

To:
Superintendents, Charter School Leaders, and School Business Officials
From:
Mitchell D. Chester, Ed.D., Commissioner
Date:
December 4, 2012

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Today, Governor Patrick announced a reduction of $225 million in FY13 Executive Branch spending. The Department of Elementary and Secondary Education (Department) will reduce spending by $21.7 million as part of the Administration's overall 9C reduction plan.

The Governor's action is the result of lower-than-expected state revenue collections, which have fallen from the original estimate of $22.011 billion to $21.496 billion, for a total revenue shortfall of $540 million for FY13. To address the revenue shortfall, the Administration will seek an additional $200 million from the Commonwealth's rainy day fund, bringing the total amount that would be used from that fund in FY13 from $350 million to $550 million. This action will result in a projected balance in the rainy day fund of $1.2 billion at the end of FY13. The Governor is also filing legislation to achieve savings of $25 million (1 percent) from non-Executive Branch agencies and Constitutional Offices. The legislation also seeks a $9 million (1 percent) across-the-board reduction in unrestricted (non-education) local aid.

The reductions in the Department's budget will affect five programs that provide funding to local and regional school districts:

  • Special education reimbursement (circuit breaker)
    This appropriation was reduced by $11.5 million, or 4.75%. Initial payments were made earlier this fall based on an estimated reimbursement rate of 70%. Because we still have audits in process and have not yet processed claims for extraordinary relief, we are not yet able to establish the final reimbursement rate. It is still possible that the final rate will be in the vicinity of 70%.
  • Transportation reimbursement for homeless children
    This new appropriation was reduced by $5.25 million, or 46%. We believe this will result in a reimbursement rate in the vicinity of 55% for these costs, but we are still awaiting the filing of some End of Year Financial Returns to confirm this estimate.
  • Regional transportation
    This appropriation was reduced by $1 million, or 2%. We expect this year's reimbursement rate will be between 58% and 60%.
  • Charter school tuition reimbursement
    This appropriation was reduced by $1 million, or 1.4%. Based on last spring's charter school pre-enrollment reports, the original appropriation provided a 73% reimbursement level. We are currently recalculating the entitlements under this program based on October 1 SIMS enrollment and districts' FY13 budget data. Updated estimates, reflecting these recalculations and the budget reduction, will be published on our website later this month.
  • Foundation reserve (pothole)
    This appropriation has been reduced from $3.5 million to $1 million. These are discretionary awards made by the Department based on eligibility criteria established by the Legislature. We have not yet published application information for FY13 awards.

No reductions have been made to Chapter 70 state aid or to any grants that have already been awarded. The remainder of the Department's budgetary reduction will come from payroll savings as a result of the hiring controls implemented by the Administration in October.

Despite these reductions, the Department's total budget remains significantly higher than our FY12 spending level. We do recognize that any mid-year reduction creates additional challenges for you and your staff. If you need any further information regarding these changes, please contact Deputy Commissioner Jeff Wulfson or Jay Sullivan, Executive Director for School Finance and District Support.

Thank you for all that you do to improve the quality of public education across the Commonwealth.



Last Updated: December 7, 2012
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