On the Chapter 70 study committee: what they are, or at least SHOULD, talk about

Sorry, I know the first of these public sessions already happened this week. This fall is somehow feeling particularly slammed for me...remember, they also will take electronic submission of testimony at C70PublicComment@mass.gov.
Also, yes, again, this is me posting as me and not in any other capacity.

When I last wrote on this for you, I shared what isn't going to come up in the study commission because it isn't things with which they are charged. 

Note that those are all things about which we should be talking, too! We really cannot ignore how harsh not having SOA increases is going to be on the districts that have been using them to ensure they can maintain services, because inflation isn't keeping up with costs, much as so many other districts have been pushing local increases for the same reason.

In other words: 

INFLATION INFLATION INFLATION

However, again, this study is specifically to study the "municipality's target local contribution and required local contribution" so it's looking at what I think of as the SECOND part of the question: once we have decided what a "minimum adequate per pupil budget" is, where does the money come from? 

Here are some things that I expect to come up, some of which are written right into the study language itself:

How much of this is the state picking up?

The first time someone raised their hand during a presentation and said something like "you just told us the state is responsible for public education constitutionally, so why are local communities expected to contribute at all?" I have to admit that I was taken aback. Schools being funded from local property taxes is so much a part of how we run things here that I hadn't considered the premise.

That this makes me particularly a product of Massachusetts was brought home to me, as I related here, by Matthew Gardner Kelly's citation of Fletcher Swift: 

...and further, in his book, which focuses on California school funding, California--again, as just one example!--had a vigorous debate over if a STATE system of education could be anything OTHER than state funded. 

This does, of course, mean that you'd eliminate the built-in extreme inequities of funding schools through local property taxes, which is probably about as inequitable a system as one could imagine. 

I suspect you'd also have many, many, many who would passionately argue that somehow eliminating that built-in inequity would be unfair...somehow. 

I think there's a pretty decent constitutional argument, there, though, if you'd like to tackle it. 

Currently, the split, at least in theory, is 59% local, 41% state. For FY24, that would look like this: 

Quick pie chart using the state's excel workbook 
(thus the slightly weird labels)

However, remember, there's another thing that happens before we get to how much chapter 70 aid districts actually get, and that's:

1. are they getting as much state aid as they got last year?
2. are they getting an increase?

Once you add those--hold harmless aid and minimum aid increases--in FY24, the split looks more like this: 

red remains state aid, blue local contribution
the red has increased by about $200M

The change there to the state contribution is largely hold harmless plus the minimum aid increase; as I noted in the earlier post, those together for the current fiscal year total about $350M¹. That's a increase of $150M over two years, which is a lot!
The study is supposed to consider not only this split, but also "the number of municipalities receiving minimum per pupil aid and the impact of such aid on those municipalities." While I suspect that this is not really what was meant, it does matter that, just using this stage, the balance for FY24 would be 46.8% state, and thus 53.2% local.

And the reason that I raise this issue at all is what happens in actuality; here's FY24, actual spending:

blue is state; red is local, which was required to be $7.7B
What local communities actually spent was $12.4B

So on ACTUAL spending, for FY24, the state's covering something more like 35%.

Now, remember that nearly $5B or so in local spending that is done on a discretionary basis is not distributed based on anything other than local municipal and associated regional district boundaries, and the local funding capacity and political will.
Nonetheless, it's a very different picture than the 59/41 split that is what the state has in the law.

Invisible spending matters

I do want to get this almost $5B--and that's FY24!--number out there, because we really don't talk about it. And when, thus, the study goes into the question of how we calculate who gets how much aid--is income and property wealth a fair measure? is capping contribution to foundation at 82.5% appropriate?--the part that is invisible, much like hold harmless in my view, is how much money ACTUALLY is ALREADY being spent outside the measure. 

We really do ourselves a disservice when what we talk about is how much state aid increases by ONLY in these discussions. Hold harmless aid is REAL aid, and local spending OVER minimum required is real spending. And these are, I would also argue--based on actual numbers--where some of the biggest inequities in Massachusetts public education are, though I am also going to observe that it is very much not where the loudest outcry is. 

On to what else may come up. 

Measuring wealth

Currently, Massachusetts measures the wealth of the community--and thus the ability to contribute--through property wealth (taxable property, note) and income wealth. Those are then put in a ratio to one another that mirrors that of the entire state.

It is frequently noted that local communities have no ability to tax income, and thus measuring income wealth of a community is not a measure of the local community's ability to raise revenue. At the same time, if we use only property wealth--which the state did!--communities that are property-rich but full-year-resident poor (hello Cape and Berkshires) argue that their true capacity isn't measured. 

I do not have a magic answer to this question. I will kick it back up to the same issue above, though, which is to say that we cannot have an equitable public education system which is built on the back of property taxes.

This is also where the 82.5% cap comes in: every community gets at least 17.5% of their foundation budget as state aid. Communities have pointed out, though, that there is a difference between a community that can, by the standard state measure, afford 83% of their foundation budget, and one that can afford 200% of their foundation budget. 
On one hand, yes. On the other, every community that can afford 82.5% of their foundation budget is spending WAY more than that on their schools, and plenty of them are also getting millions in hold harmless aid, too. I think if we're going to talk about that--and sure, we can do that--we also need to look at how much aid districts are actually getting, how much communities are actually spending, and then have that discussion. 

Measuring increases

This one is I think one of the least understood, but possibly most understandable, parts of the whole calculation. Every year, local finance committees tell their school committees "we can only raise revenue 2 1/2 percent." And every year, at least somewhere, there is concern or consternation that the required local contribution is MORE than 2 1/2 percent! 

Prop 2 1/2 is the law! How can this be?

Local revenue is not capped at a 2 1/2 percent increase, is the answer. Local required contributions for schools increase by the municipal revenue growth factor (MRGF, though that hardly rolls off the tongue), which only INCLUDES the 2 1/2 capped increase. It also includes new growth in local revenue, unrestricted local government aid, state owned land, and the recurring local receipts. The Division of Local Services at the Department of Revenue puts it all in a nice little chart like this: 

 

This is Worcester's for FY26, which shows our local revenue growing by a healthy 5.26%. 
You'd think we could make our minimum local contribution with that, wouldn't you.

I strongly recommend that local communities make these calculations well known locally, incidentally, as they can clear up misconceptions as to who is doing what math. 
Now, the MRGF isn't explicitly listed in what is being studied, but someone should be sure we're having a "how much money do local communities have, anyway" conversation, as part of this, and that certainly is included there. 

In sum?

I really think we have talk to talk about how much state aid communities are actually getting; how much local communities are actually spending; compare those to the foundation budgets of those districts; and then have the conversation from there.

My two cents.

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¹Should you be interested, for FY26, that split, when we include hold harmless and minimum aid is 47% state, and thus 53% local.

red is local, blue is state contribution including hold harmless and minimum aid