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Administration and Finance

FY2025 Preliminary Chapter 70 Aid and Net School Spending Requirements

January 24, 2024

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 FY2025. These estimates are based on House 2, Governor Healey's proposed state budget for the coming fiscal year. The proposal increases aid to districts from $6,592,623,086 to $6,856,027,888, an increase of $263 million or 4%.

These are preliminary estimates subject to change as the House and Senate deliberate on the budget. Our purpose in providing these estimates is to assist cities, towns, and regional school districts in their budget preparations for FY2025. 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 FY2025 state budget or an earlier local aid resolution.

The FY2025 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, which are all expected to be phased in by FY2027. For FY2025, the rates have been increased by 4/6ths 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 FY2025 the increase is 5.03%. An inflation rate of 1.35% is applied to all other foundation budget rates, based on the U.S. Department of Commerce's state and local government price deflator.

Statewide, foundation enrollment increased from 905,106 in FY2024 to 905,331 in FY2025, an increase of 225 students. Foundation enrollment decreased for 165 districts, while 148 districts experienced enrollment increases.

Finally, the formula's minimum aid provision guarantees all districts receive at least the same amount of aid in FY2025 as they did in FY2024 plus a $30 per pupil increase.

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 FY2025, 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 verified as low income through a supplemental data collection process first used for Chapter 70 in FY2023; or
  • Students reported by a district as homeless through the McKinney-Vento Homeless Education Assistance program application.

Statewide, low-income enrollment for FY2025 is 414,590, compared to 421,305 in FY2024.

The Act also provides for a phase-in of increases to the assumed in-district special education enrollment to 5% for vocational students and 4% for non-vocational students. In FY2025, these assumed rates have been increased by 4/6ths of the gap to 4.93% and 3.93%, respectively.

Required Local Contributions

The aggregate wealth model that has been used to determine target local contribution requirements since FY2007 is now codified in Chapter 70 by the Act. For municipalities with preliminary required contributions above their targets, the effort reduction component of the formula closes 100% of the gap between their preliminary contribution and their contribution target. For municipalities with preliminary required contributions significantly below their targets, the formula continues to apply an additional increment to their required contribution to close a portion of the gap to their contribution target.

Finally, pursuant to its codification in Chapter 70 by 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 FY2025.

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 FY2025 have been incorporated into our projected FY2025 tuition rates. In addition, charter school low-income enrollment for FY2025 has been identified using the same eligibility criteria used for districts. The facilities component of the tuition rate is $1,188 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 FY20 budget, which provided for a reimbursement 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 required 75% of the total state obligation to be funded in the first year (FY2022), 90% in the second (FY2023), and 100% in subsequent years (FY2024 and beyond). The Governor has recommended a $199.0 million appropriation for these reimbursements. This appropriation level is expected to meet the 100% requirement in FY2025. The projected assessments and reimbursements for charter tuition payments at this point can be useful for budget planning but should not be viewed as final numbers, given normal fluctuations in both projected and actual enrollments which occur over the course of the fiscal year.

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

Questions about the Chapter 70 program should be directed to:

Rob O'Donnell
781-338-6512

Last Updated: January 24, 2024

 
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