Bailing twine and bubble gum: school funding in the House Ways and Means proposal

 The House Committee on Ways & Means released their FY27 budget last Wednesday, and they're currently taking amendments before the House debate on the budget starts next week. 

I've been considering what to say about it since then (sorry if you've been waiting for me to post on it), and the refrain I kept coming back to is what state law says is the intent of the Legislature when it comes to school funding: 

The full section reads: 

It is the intention of the general court, subject to appropriation, to assure fair and adequate minimum per student funding for public schools in the commonwealth by defining a foundation budget and a standard of local funding effort applicable to every city and town in the commonwealth.

The Student Opportunity Act reconsidered what we said was "a fair and adequate minimum," and I remember having several conversations over the course of that advocacy, wondering if what districts actually spent would settle down to something closer to the foundation budget once the recommendations were fully implemented. The discrepancies we saw in spending across the state were about districts either using local resources to fill the gaps created by the foundation budget undercalculating the costs of health insurance and special education, or districts without those resources creating gaps in the numbers of teachers in classrooms, the amount of supplies in schools, and the funding for school maintenance (among others) to fill the undercalculated need. If the foundation budget came up to the level deemed adequate, would local districts with resources available be spending at something closer to foundation?

The answer, to date, is no, as in FY25, the last completed fiscal year we have, the statewide average spending was 25.8% over required, and FY26 budgeted spending was 26.3% over required. 

As so often, this made me wonder what has spending been over minimum required during this whole period, so I went to look and I made us a chart.
All data, as per usual, from DESE school finance.

This coming year, FY27, is full implementation, so I don't think it's premature to say that didn't happen. 

What did happen, of course, was inflation went haywire due to outfall from the pandemic. This is true both of inflation as measured by the foundation budget --a factor in the foundation budget that was not discussed by the Foundation Budget Review Committee, and thus was not in any of the legislation proposed or passed--and inflation of the costs in school districts' budgets. Of the latter, many, many things cost much much more than they did seven years ago, and in ways that weren't foreseen. Of the former, the boost of federal funding running headlong into the inflation cap of the Student Opportunity Act, thus giving us two years of the capped 4.5% rate, and having very small increases in spending to reflect once the federal aid was gone, giving us the ensuing years of low inflation, have given us a foundation budget that has not at all kept up with those district costs. 

Thus NOBODY's "fair and adequate minimum" is really adequate, and we're back to the same sorts of coping strategies of dealing with it, with the addition that districts that have, due to the Student Opportunity Act, been seeing large increases in their foundation budgets, due largely to high numbers of students in poverty, and large increases in state aid, due to low local ability to contribute, have the funds to balance their budgets without cuts, but aren't, I'd venture, able to put the funds into the additional resources the Foundation Budget Review Commission foresaw. 

And I am going to keep repeating this: unless the Legislature takes action before the next budget, FY28 is going to be a really rough year for those districts, then, too.* 

The House Ways and Means budget does not deal with this reality, as the Governor's proposed budget did not. It does fulfill the final year of the Student Opportunity Act, which it's been clear the leadership of the Legislature both was committed to, but also saw as being necessary before discussing what comes next. That, of course, guarantees that we will have a period in which "what comes next?" is "nothing," because it takes years, literally, to do studies and then pass legislation to make changes. See, again, above my warning about FY28. 

And the Legislature could, of course, have seen what were the entirely unforeseen impacts of the pandemic on inflation and have responded along the way. Colin Jones of (then) MassBudget even gave them the numbers to do so.  Had we implemented those changes back when they were proposed, we wouldn't see nearly the number of districts in the fixes they are in. It isn't clear to me that the above is particularly well understood by many, however. 

So what is the House proposing beyond SOA implementation? 

I am ongoingly depressed to say that we're seeing an increase in the per pupil minimum increase to $160 from the Governor's proposed $75/pupil. As I have said, and will continue to say about per pupil: this has no relationship at all to the "fair and adequate minimum per pupil" to which we commit, and thus our continuing to do this and allow it to build up through holding districts harmless drives us further and further away from a funding system that is based on student need and local ability to contribute. 

As I said last week when I presented this chart as part of an MASC Chapter 70 presentation: 
I don't use Franklin to pick on Franklin; I use Franklin because it is the best illustration of what hold harmless does over time. We're now up to $268M in hold harmless statewide for FY27.

Those per pupil minimums also, somewhat ironically, aren't enough to keep up with actual district increased costs. Don't believe me? Multiple your district enrollment by $160 and then tell me if that's covering the increase in costs from last year.

We are continuing to see responsiveness on out-of-district special education costs, with circuit breaker in the House budget increasing a bit over the Governor; in both cases, it tops $650M; there is additional funding in the various supplemental budgets that have yet to be reconciled. As that is a reimbursement, changes over the course of the budget are usually attempts to track closer to what DESE projects necessary. However also, as it is a reimbursement, it means districts are fronting those costs in their operating budgets. 

We're seeing rural aid, though the initial House Ways & Means proposal is $10M to the Governor's $20M. I do not mean to be a cynic, but it could be that this was set up as a way for someone to be a hero and propose the amendment to raise it up to match the Governor's proposal. This and all other such grant lines generally do not make their way to districts until after the school year has started, so these lines generally do not save, for example, teachers in classrooms. 

The House Ways and Means budget also proposes $10M:

For a reserve to offset reductions in state aid distributed to cities and towns under chapters 70 of the General Laws due to unexpected reductions in English language learners 

...which I am guessing is a response to the drop in some--but note, not all--cities with large immigrant populations seeing a drop in enrollment. I will note that I am concerned about it being framed as losses of English learners due to what we saw in the Congressional discussion around Plyler and the rights of undocumented students to attend public schools; we do not want, I'd argue, to give the impression that English Learners are the same as undocumented students, and vice versa. If the districts spoken of in this section aren't getting as much state aid as they did last year, they of course are included in the above hold harmless and minimum per pupil increases.** Much like rural aid, I'd anticipate that any aid of this sort would not be received by districts until a few months into the school year, and thus it would be difficult for such aid to be used for salaries.

What the above means to me--and thus the title of the post--is that rather than digging into the very much needed reworking of our core funding program, which is founded on our shared constitutional obligation to educate every child in every city and town in the Commonwealth, we are instead piecemealing funding increases--hold harmless, per pupil increases, rural aid, this EL account--to try to hold the structure together. Rather than fixing it, we're trying to hold it together with bubble gum and bailing twine. 

The House Ways and Means budget also continues the trend we have seen, both in the Governor's proposed budget and in prior year budgets, of covering operational increases in accounts one would expect them, including chapter 70 aid, with Fair Share funding. As State House News Service's Sam Drysdale put it earlier in the year: 

To quote in part: 

The fiscal 2027 budget, filed Wednesday, and the supplemental surtax budget submitted alongside it reflect a continuation of a trend that has emerged over the past four years: surtax revenues, initially pitched by advocates as funding new investments on top of existing obligations, have been weaved by Beacon Hill leaders into core state responsibilities like K-12 school aid, early education, and day-to-day operations at the MBTA.

The administration proposes $1.66 billion in surtax spending on education in the fiscal 2027 budget and another $358.3 million in the supplemental bill. Transportation accounts for $1.04 billion in surtax spending in the budget and $784.7 million more in the supplemental proposal, with the MBTA alone slated to receive more than $1.1 billion across the two measures.

Between this and spending it on earmarks, I can't help but be disappointed that we aren't seeing a real vision for statewide new spending that helps all kids.***

This is, as always, my personal take as someone who watches this. I wrote about the Governor's budget here. Account by account tracking (which I'm still updating) over here.

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 *yes, including Worcester, which is why the Finance Office always includes those five year projections in the front of the budget book. Be sure and look for it this year; it's going to be one of the first places I look when it comes out in a few weeks. 

**interestingly, Chelsea, between the Governor's budget and House Ways and Means, moved from foundation aid to a minimum per pupil increase, as their foundation aid in the Governor's budget was an $89 per pupil increase. As that is less than the $160/pupil proposed in the House, they're now a minimum aid district. (There's a column on the DESE master spreadsheet that tracks that.)

***I personally was hoping they'd set up a method of bonding at least a bunch of it for additional funding for school construction and renovation.