Department of Elementary and Secondary Education Logo
Administration and Finance

Advisory Memorandum on Financial Administration of the School Choice Program

The purpose of this memorandum is to provide guidance to school and municipal officials on various financial issues related to the inter-district school choice program. The school choice program is authorized under MGL Chapter76, Section12B.

Calculation and payment of tuition charges

School choice tuition charges are assessed against sending districts and paid to receiving districts as part of the monthly local aid distribution. Tuition assessments are deducted from the distribution, and tuition revenues are added to the distribution. For choice students living in towns that belong to one or more regional school districts, the choice tuition is assessed to the district in which the student would otherwise be attending public school.

The tuition charge is based on the number of full-time equivalent (FTE) students multiplied by the per pupil tuition rate. A student who enrolled in February, for example, would be counted in the range of four-tenths FTE for being enrolled for four months out of a ten month school year. The Department of Elementary and Secondary Education (DESE) calculates projected school choice tuitions at the start of the fiscal year and monthly payments are based on these figures from July through November. Information on enrolled choice students is first obtained from receiving districts' Student Information Management System (SIMS) submissions as of October 1. Monthly payments from December through May are based upon these October student counts. In April, receiving districts provide more detailed information on these students' specific enrollment dates, special education increments, street addresses, etc. on a "school choice claim form." This information is used to calculate final full-time equivalency and tuition for the year. June payments and assessments are the net amounts due for the fiscal year.

Per pupil tuition rates are based on receiving districts' per pupil costs for the prior fiscal year, in the following categories: instruction, pupil services, administration, maintenance, and fixed charges. Separate tuition rates are calculated for regular, bilingual, and occupational programs.

The school choice tuition for students in a regular education program is $5,000 per student. For students attending half-day kindergarten, tuition is $2,500 per student. For a student with an individualized education plan (IEP), a special education increment is added to the regular education tuition rate that the receiving district is paid. The amount of the increment is determined by applying annual cost rates to the specific services cited in a pupil's IEP. These costs are generated from the same template as is used in the circuit breaker program for high-cost pupils. For any pupil with a special education increment, it is the responsibility of the receiving district to keep a record of what services were counted toward the cost.

Ensuring the accuracy of tuition charges

In January, DESE provides both sending and receiving districts with preliminary reports showing the name, grade, program, and estimated annual tuition for each pupil reported the previous October. If there are disagreements between districts about any of this information, they are encouraged to work together to resolve them in time for any necessary corrections to be made on the April 1 claim forms. DESE sends districts final reports for the prior fiscal year in July, including special education increments. Any errors that need to be resolved at that point should be reported to ESE. If necessary, adjustments will be made to the current year payments to account for reported errors in the prior year's calculations.

Accounting for tuition charges (sending districts)

The "cherry sheet" is a notice of anticipated state aid and assessments produced by the Department of Revenue (DOR). Cities and towns must use these estimates in preparing their tax rates for an upcoming year. Estimated school choice tuition expenditures are shown as charges against receipts on sending districts' cherry sheets.

Actual school choice tuition expenditures are entered by DESE on Schedule 1 of the End of Year Financial Report (EOYR) under school choice tuition (function code 9110). For local districts, the amount is shown as a city/town expenditure (line 2220) and for regional districts it is shown as a school committee expenditure (line 1780). Expenditures for school choice tuition are included in a district's net school spending requirement, as defined in MGL Chapter 70.

Accounting for tuition revenues (receiving districts)

The municipal or district treasurer should transfer the amount received for school choice tuition revenue each month into a school choice revolving account. These funds are then available for expenditure by the school committee without further appropriation. DESE populates school choice revenues on Schedule 1 line 630, school choice tuition receipts.

Because cities, towns, and regional school districts must account separately for school choice assessments and revenues, it is improper to "net out" the assessments from the revenues and only deposit the balance in the revolving fund.

Expenditure of tuition revenues

While the school choice statute does not provide explicit guidance as to the allowable uses of choice tuition revenue, the requirement that municipalities place such revenues in a special account for use by the school committee indicates a legislative intent that they be used for the general purposes of the school choice program. School choice tuition is intended to provide a financial incentive to encourage districts to participate in the program. Therefore, allowable expenditures include any expenditures for staff, materials, equipment, or services that directly enhance the quality of a district's educational programs and benefit students who currently attend a district's schools.

If a school committee does not need to spend tuition revenues on direct services for education, it may use those revenues for other expenditures that enhance current educational programs for students. For example, in such limited circumstances, it may be appropriate to use tuition revenues for the construction or renovation of a science or computer laboratory. Because the school choice statute requires the school committee to spend the tuition revenues, the committee may not transfer these funds to another municipal department for purposes unrelated to education. Additionally, local school committees may not transfer funds for the payment of debt service, even if the debts were incurred by the municipality for a school-related capital expenditure, as such expenditures are not within the scope of the school committee's power or authority.

Expenditures made from the revolving fund for school choice tuition revenue do not count toward meeting a district's net school spending requirement because the spending requirement relies upon local tax effort and school choice revenue is derived from other communities. An appropriating body may not reduce the school operating budget below the amount required to meet the district's net school spending requirement with the expectation that school choice revenues will be available to make up the difference. The appropriating body, however, may take into account the availability of school choice revenues and other special revenues in deciding how much to appropriate above the net school spending requirement.

How the Commonwealth shares in the cost for school choice

Under the current Chapter 70 formula, the pupils at a receiving district are credited toward the sending district's foundation enrollment. However, any low-income increments for those pupils are credited to the receiving districts' foundation budgets.

Chapter 70 is general aid to education, which has been built up by annual increases over several decades. Although the increases can be pegged to specific categories of pupils through any given year's foundation budgets, the entire aid amounts cannot. The aid applies equally to all categories of expenditure in a district's operating budget (net school spending). If a district's aid represents 40 percent of its budget, then the aid is paying for 40 percent of that year's school choice sending tuition.


Special education students: When transportation services are required by a student's IEP, the sending district must pay the full cost. If the districts agree that the receiving district will provide the transportation, DESE should be notified so that the cost can be added to the student's tuition charge. In such cases, the sending district should report the cost on its EOYR as a transportation expense qualifying for state reimbursement. Likewise, the receiving district must report the cost as a non-qualifying transportation expense.

All other choice students: For all other choice students, there is no obligation on the part of either the sending or receiving district to provide home-to-school transportation. If either district chooses to voluntarily provide such transportation, the costs are not eligible for reimbursement under the state's pupil transportation funding programs; they must be reported as non-eligible expenses on Schedule 7. However, the district may use choice tuition revenues to pay for choice student transportation.

Last Updated: March 24, 2020

Contact Us

Massachusetts Department of Elementary and Secondary Education
135 Santilli Highway, Everett, MA 02149

Voice: (781) 338-3000
TTY: (800) 439-2370


Disclaimer: A reference in this website to any specific commercial products, processes, or services, or the use of any trade, firm, or corporation name is for the information and convenience of the public and does not constitute endorsement or recommendation by the Massachusetts Department of Elementary and Secondary Education.