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  • Administration and Finance

    FY2023 Preliminary Chapter 70 Aid and Net School Spending Requirements

    January 26, 2022

    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 FY2023. These estimates are based on House 2, Governor Baker's proposed state budget for the coming fiscal year. The proposal increases aid to districts from $5,503,268,225 to $5,988,520,366, an increase of $485.3 million or 8.8%.

    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 FY2023. 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 FY2023 state budget or an earlier local aid resolution.

    The FY2023 Chapter 70 program continues to implement the Student Opportunity Act (An Act Relative to Educational Opportunity for Students). 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 2, 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 by FY2027. For FY2023, the rates have been increased by 2/6ths of the gap between the rates in FY2021—the base year used in the calculations—and the final target rates. The Act also increased the number of tiers used for the low-income increment rates 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 are also 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 FY2023 the increase is 4.51%. An inflation rate of 4.50% is applied to all other foundation budget rates, based on the U.S. Department of Commerce's state and local government price deflator and capped at the 4.50% maximum set in the Act. The Act does not set a maximum for the employee benefits inflation rate.

    Statewide, foundation enrollment decreased from 907,506 in FY2022 to 903,751 in FY2023, a decrease of 3,755 or 0.4%. Foundation enrollment decreased for 153 districts, while 27 districts experienced enrollment increases of greater than five percent.

    Finally, the formula's minimum aid provision guarantees all districts receive at least the same amount of aid in FY2023 as they did in FY2022 plus at least $30 per pupil.

    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 FY2022. For FY2023, a district's low-income enrollment is based on three eligibility categories:

    • Students identified as participating in state public assistance programs, including the Supplemental Nutrition Assistance Program (SNAP), Transitional Aid to Families with Dependent Children (TAFDC), MassHealth, and foster care; or
    • Students certified as low income through the new supplemental data collection process; or
    • Students reported by a district as homeless through the McKinney-Vento Homeless Education Assistance program application.

    Statewide, low-income enrollment for FY2023 is 407,501, compared to 382,088 in FY2022, which included students matched through direct certification or an estimated student count based on FY2016 low-income enrollment.

    The Act also increases the assumed in-district special education enrollment to 5% for vocational students and 4% for non-vocational students. In FY2023, these assumed rates have been increased by 2/6ths of the gap to 4.86% and 3.86% respectively.

    Required Local Contributions

    The aggregate wealth model that has been used to determine local contribution requirements since FY2007 and that is now codified in the Act remains in place. For municipalities with required contributions above their targets, the equity component of the formula sets their contributions at target.

    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 FY2023.

    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 FY2023 have been incorporated into our projected FY2023 tuition rates. In addition, charter school low-income enrollment for FY2023 has been identified using the same eligibility criteria used for districts. The facilities component of the tuition rate is $1,088 per pupil, up from $938 per pupil in FY2022, 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 FY20 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 $219.4 million appropriation for these reimbursements. This appropriation level is expected to meet or exceed the 90% 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.

    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: January 26, 2022

     
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