School Finance and District Support

FY2022 Chapter 70 Aid and Net School Spending Requirements

July 16, 2021

On July 16, 2021 Governor Baker signed the FY2022 state budget that authorizes $5,503,268,224 in Chapter 70 education aid to Massachusetts school districts. This budget increases aid by $219.6 million or 4.2% over FY2021. Every operating district receives at least $30 in additional aid per student.

The FY2022 Chapter 70 program reflects the passage in November 2019 of An Act Relative to Educational Opportunity for Students, commonly known as the Student Opportunity Act (the Act). The Act makes significant changes to the Chapter 70 formula, based in large part on the recommendations of the Foundation Budget Review Commission (FBRC). The updated formula is also codified in Chapter 70 of the general laws.

Statutory parameters

The updated formula includes three parameters to be specified in each year's general appropriations act. In the FY2022 budget, these are specified as follows:

  • Total state target local contribution: 59%
  • Effort reduction: 100%
  • Minimum aid: $30 per pupil

Foundation budget changes

The Act establishes new, higher foundation budget rates in five areas: benefits and fixed charges, guidance and psychological services, special education out of district tuition, English learners, and low-income students, all to be phased in over a seven year period. The rates have been increased by 1/6th of the gap between the FY2021 rates and the final target rates. The number of tiers for the low-income increment rates is increased from ten to twelve; districts with higher concentrations of low-income students benefit from higher rates.

In addition to these targeted rate increases, foundation budget categories have been increased to account for inflation. A new employee benefits inflation rate is applied to the employee benefits and fixed charges category. This is based on the enrollment weighted, three-year average premium increase for all Group Insurance Commission plans; for FY2022 the increase is 2.78%. An inflation increase of 1.41% has been applied to all other foundation budget rates, based on the U.S. Department of Commerce's state and local government price deflator.

The combination of inflation, rate increases dictated by the Act, and the low-income enrollment expansion increased statewide foundation budgets by $300 million or 2.58%, despite the impact of a statewide enrollment decline of 3.26%, due in part to the ongoing pandemic. Overall foundation enrollment decreased from 938,085 in FY2021 to 907,506 in FY2022, a decrease of 30,579. Foundation budgets declined for 147 operating districts, including 27 districts with declines of more than 5%.

The Act also adds a new minimum aid adjustment to the formula. This provides hold harmless aid to 16 school districts that would otherwise have higher aid levels if the Act were not implemented.

Finally, the formula's minimum aid provision guarantees all operating districts receive at least the same amount of aid in FY2022 as they did in FY2021 plus at least $30 per pupil. Therefore, the enrollment changes and any associated foundation budget decreases did not yield less aid than FY2021.

Low-income and special education enrollment

The Act reinstates the definition of low-income enrollment used prior to FY2017, based on 185% of the federal poverty level. It replaces the economically disadvantaged designation (based on 133% of the federal poverty level) used from FY2017 through FY2021. For FY2022, a district's low-income enrollment is the higher of: (a) the number of students matched through the Department's current direct certification process (which identifies students whose families have been approved for various federal and state benefit programs) or (b) the district's FY2016 low-income percentage multiplied by its current foundation enrollment. Statewide low-income enrollment for FY2022 is 382,088, including students matched through direct certification and estimated student counts based on FY2016, compared to 351,970 identified as economically disadvantaged in FY2021, which only includes students who were directly certified.

The Act also increases the assumed in-district special education enrollment to 5% for vocational students and 4% for non-vocational students. In FY2022, these assumed rates have been increased by 1/6th of the gap to 4.83% and 3.83%, respectively.

Required local contributions

The aggregate wealth model that has been used to determine local contribution requirements since FY2007 remains in place and is now codified in the Act.

Finally, pursuant to its codification in the Act, a provision introduced in the FY2020 budget specifying a minimum required local contribution of 82.5% of foundation for any city or town with a combined effort yield greater than 175% of foundation is continued in FY2022.

Enrollment reserve fund

The budget also includes a $40 million reserve fund (7061-0011) to address the impact that pandemic related enrollment loss had on state aid or transportation costs. The distribution of these funds will be determined after October 1, 2021 enrollment is reported.

Charter school tuition

Foundation tuition rates for Commonwealth charter schools are based on the same foundation budget rates used in Chapter 70. The foundation budget rate increases being implemented in FY2022 have been incorporated into our projected FY2022 tuition rates. In addition, charter school low-income enrollment for FY2022 has been calculated in a manner consistent with the methodology used for districts. The facilities component of the tuition rate is held constant at FY2021 levels, at $938 per pupil, with this cost fully reimbursed by the state as in prior years.

The FY2022 budget includes an increase of $37.2 million over the FY2021 GAA for Charter School Tuition Reimbursements (7061-9010) to $154.6 million. The reimbursement formula for transitional aid to districts reflects the change enacted by Section 38 of the FY2020 budget, with an entitlement of 100% of any tuition increase in the first year, 60% in the second year, and 40% in the third year. Funding for first year reimbursements is prioritized first, followed by funding for second year reimbursements. The line item includes a $2.9 million earmark to provide additional reimbursement to 5 districts that are at their tuition caps.

The Act requires 75% of the total state obligation to be funded in the first year, 90% in the second, and 100% in subsequent years. The $154.6 million appropriation is expected to meet the 75% requirement when tuition assessments are updated to reflect actual enrollments and district spending levels. The projected assessments and reimbursements for charter tuition payments at this point in time can be useful for budget planning but should not be viewed as final numbers.

DESE has prepared the following materials to assist local officials in understanding the state aid calculations and local contribution requirements in this year's Chapter 70 program:


Questions about the Chapter 70 program should be directed to:

Rob Hanna
781-338-6525

Rob O'Donnell
781-338-6512

Last Updated: September 16, 2021

 
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