School Finance and District Support

FY2022 Preliminary Chapter 70 Aid and Net School Spending Requirements

January 27, 2021

Pursuant to section 6 of Chapter 70 of the General Laws, the Commissioner of Elementary and Secondary Education is issuing the preliminary estimates of Chapter 70 school aid and net school spending requirements for FY2022. These estimates are based on House 1, Governor Baker's proposed state budget for the coming fiscal year. The proposal increases aid to districts from $5,283,651,631 to $5,481,304,643, an increase of $197.7 million or 3.7%.

These are preliminary estimates subject to change as the House and Senate deliberate on the budget. Our purpose in providing these estimates at this time is to assist cities, towns, and regional school districts in their budget preparations for FY2022. We advise you to construct your local budgets with sufficient flexibility to accommodate the changes that often occur in the state budget process. The Commissioner will issue the final, official school spending requirements as soon as the Governor and Legislature approve either the FY2022 state budget or an earlier local aid resolution.

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 House 1, 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 1/7th 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 $257 million or 2.21%, 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 153 operating districts, including 29 districts with declines of more than 5 percent.

The Act also adds a new minimum aid adjustment to the formula. This provides hold harmless aid to 18 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 1/7th of the gap to 4.82%fg and 3.82%, respectively.

Required Local Contributions

The aggregate wealth model that has been used to determine local contribution requirements since FY2007 remains in place.

Also, in FY2022, municipalities may deem an amount up to 75% of the total grant awarded to its local school district through the Elementary and Secondary Education Emergency Relief (ESSER) program enacted by the federal coronavirus response and relief supplemental appropriations act on December 27, 2020 (also known as ESSER II) to fund any increase in its local contribution requirement under Chapter 70, but not more than the increase in required local contribution in FY2022 relative to FY2021. In the case of a municipality's increased required contribution as a member of a regional school district, a municipality may deem a proportional share of 75% of the regional district's total ESSER II grant award, equal to the municipality's share of the district's total required contribution, to satisfy the increase in its required contribution.

This provision will allow districts to use a portion of ESSER II funding to satisfy net school spending increases. It is important to note that these funds can only be used to meet FY2022 spending requirements and will not count toward meeting spending requirements carried forward from prior fiscal years. Of the 225 (out of 318) school districts with increased required local contributions in FY2022, 147 or 65% are receiving sufficient ESSER II funding to offset 100% of the increase using between 1% and 75% of their total ESSER II awards. It is important to note, however, that many districts are voluntarily contributing much more funding above requirement than the amount eligible for substitution with ESSER II funding under this provision.

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.

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 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 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 Governor has recommended a $143.5 million appropriation for these reimbursements. This appropriation level is expected to meet or exceed 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.

In calculating charter school tuition payments, the Department is excluding the per pupil amount of required local contribution that may be supported by each sending school district's ESSER II award, consistent with the fact that federal funds cannot be transferred to charter schools in district tuition payments. This exclusion results in a reduction in tuition payments to charter schools of $7.5 million. Like districts, charter schools will be able to access their own ESSER II funding to make up for this tuition reduction. However, in cases where charter schools would otherwise need to use more than 75% of their ESSER II funding to offset the tuition reduction, the state will direct additional state payments to these schools totaling $385,058 to make up the difference. In total, charters will be able to use $7.1 million of their available ESSER II funding to offset for lost tuition revenue, which represents 11% of their total available ESSER II awards.

Here are links to more detailed information on the Governor's proposed budget:


Questions about the Chapter 70 program should be directed to:

Rob Hanna
781-338-6525

Rob O'Donnell
781-338-6512

Last Updated: July 26, 2021

 
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