"Chapter 70 and Local Education Funding"

at the Worcester Registry of Deeds for the WEC/Research Bureau presentation on the Chapter 70 formula and local education funding. With Luc Schuster from Mass Budget and Policy, Ben Forman from MassINC, Tom Zidelis from the City of Worcester, and Brian Allen from the Worcester Public Schools.

Posting as we go

McGourthy: not only to have informed policy makers, to have informed public
education crucial to our city
"how we go about fundng that effort...is critical"
today is about how the funding works, then how it comes in
second presentation in December is on how priorities are set within the budget
"everyone acknowledges the importance of public education to a strong community"
education is nearly 60% of the city budget; economic development got 1%
in MA, state and local share responsibilities
chapter 70 has remained essentially unchanged since 1993

Schuster:
I'm just going to point out here that MassBudget has a longer presentation on chapter 70 here
"basic scaffolding of the formula is somewhat simple"
don't get caught up in the weeks of some of the smaller changes
per pupil foundation budget calculated to start; that becomes the minimum spending level in the community
"state recognizes that Worcester has a different student population than Newton"
state then calculates how much each community can afford towards each foundation
chapter 70 then fills those gaps, "at its base level, that's all that chapter 70 is"
extra local contribution: "Newton kicks in about $6000 above its required minimum"
while Worcester has greater needs for its student population, at the end of the day, Newton is spending more on its pupils
A few years ago, MassBudget looked at foundation budget on its 20th anniversary
gap of $1.1 billion on health insurance (between what is spent and what is calculated)
gap of nearly another billion gap on special education
understating costs dramatically
what's the effect of this on classrooms?
in the wealthiest 20% of districts, districts are still spending on foundation budget assumptions on teachers and other classroom needs by spending significantly over the minimum foundation budget communities
in the least wealthy 20%, districts are spending nearly 1/3 less on teachers; dramatically underfunding core services to students
'though everyone spends below the foundation budget on teachers except the wealthiest 20% of communities
Legislature has created a foundation budget review commission this year (long overdue: was supposed to be meeting right along): will be public hearings across the state; important chance for people to get engaged in the conversation

Forman: school finance in Gateway Cities
mission is to promote the growth of the middle class
Gateways are the front line for the fight for the middle class in the state
state created a formula for a list of two dozen cities in Massachusetts
"how we view education as an oppoutnitie for renewal in Gateway cities"
two-thirds of tax base comes from residential properities; exact opposite in large cities
(in fact, Boston and Worcester are the reverse image 62/38 split)
"produce human capital"
1/4 of school-aged kids live in Gateway cities
increasing poverty in Gateway cities since 1993 (42% to 66% of students low income; accelerated within last few years)
thinking about improving education for poor kids doesn't solve all of the problem from the municipal perspective, as cities need a mix
Gateway Cities are $45 million below net school spending statewide
21 Gateway cities spend below the $14,000 statewide average per pupil average
"their needs are much higher, but their expenditures are below average"

Zidelis:
(introduced as "not quite Mr. No, but almost")
priorities set by City Council forwarded by City Manager: public safety, public works, economic development (including the bond rating), and public education
"education is somewhat a partnership with the state"
state requires the city to contribute additional revenues from year to year
municipal revenue growth factor: state estimates incoming tax levy, plus additional increases in revenue for the city
require the city to meet that allocation of local aid
city receiving about $37 million in local aid (plus MSBA reimbursement)
total city revenue increased (between FY14 and FY15) by nearly $10 million
"in relative terms,...it's a relative prioritization of revenues"
for FY15 budget, increase to WPS of $6M (of city revenue), fixed costs increase of $3M, charter schools $541,145, contingency of $3M (for contract negotiations)
"as we sit here and talk about a balanced approached, we're somewhat limited in how we can build a budget"
"somewhat balance approach"
initial effort
intention to have education be a high priority for FY16

Allen:
timely conversation particularly with the foundation budget commission
48 schools and programs, just under 25,000 students
third largest school district in the state
third largest employer in the state
about half of students transported at 10,000 miles a day
28000 meals served a day
budget priorities have been high quality teaching and learning; class size; secondary course offerings; technology and PD; "21st century expectations"
budget process begins in January; meetings with each principal and manager
"very prescriptive formula" on how staff and others are assigned
"there are no secrets"
take inputs from schools and then see what foundation budget will be based on bottom line budget
recommendation made to school committee
largest funding source is through the city ('note that two-thirds of that comes from the state)
$305M in general fund; $49M in grants "though SC approves the grants, the state DESE oversees how the grant is allocated"
about 61% of funds comes from state
of municipal funds, only about a third of the city budget (27 cents on the dollar)
allocation of FY15: 65% of budget goes to employee salaries; 13.7% to health insrance
75.5% goes to teacher salaries (within salaries); 4.6% building administrators, about the same in IA
"over 95% of positions are directly in schools"
490 employees are grant funded ($21M)
state and fedearl grants fallin gover time FY11 $49.9 to $32.8M in FY15
either through sequestration or through reallocation of grants to other states
(does not include ARRA)
only about 17 cents for all non-salary and benefit expenses
budget driven by enrollment and inflation (on revenue), and health insurance, tuition, transportation, enrollment (on costs)
costs outweighing revenue
"internal fight of city contribution is a good discussion...to have... but" replication of MassBudget calculation shows that WPS is $60M undercalculated in just health insurance and special education alone

Questions from Research Bureau
Q: chapter 70 seems broke: how to fix it?
Schuster: could say "we think assumptions underlying budget are right," but haven't made adjustments to fixed costs calculations, make those changes
OR underlying assumptions are wrong, need to account for other things, need to design an adequate school program from scratch
"I kind of think both are valid"
Allen: two billion dollar issue to the state is obviously a big challenge, but looking at some of the details.
special education does not count actual special education students: ours is double the state assumption
employee benefits piece: cities have made significant changes in employee health insurance; still spending $25M more than provided
Forman: push back a bit against this misconception that we've put million into Gateway cities schools "and they've squandered the money"
"most of our cities and most of schools, people are working as hard as we can"
"we're doing well, we can do better"
not using old model in education, either
"the field has worked hard and made a lot of progress"
"if we put more resources into the formula, we can make more progress"
Q: difference in expectation of Springfield and Worcester?
Zidelis: have to look a municipal funding with incremental needs
Q: is it possible to create a formula that works for 351 cities and towns?
Zidelis: get an MIT math whiz, and you can get a mathmatical formula that works for everyone
Q: every year there's a debate over how much over we need to go over adequate funding; shouldn't we create one that is actually adequate?
Allen: "basic formula does work" some components need to be looked at
amount that community is expected to fund; look at the wealth of the community
difference between Worcester and Springfield is the difference between the wealth of the communities
"I don't think that part is broken, 'though some may say it is"
Q: do we need to rework the whole thing? or could politics or local concerns scuttle it?
Zidelis: "YES"
Schuster: a real broad based coalition pushed for the initial change; "if there is a broad enough shared sense that there is a problem"
"it really is up to us to make that case"
Forman: "there was a court case, too, so there was a lot of pressure"
"voters don't think that money is the problem in our schools"
"we've become a much more unequal state...Massachusetts is arguably the most unequal state in the country"
"get people to recognize that we need to redistribute money to the school districts to give students the learning opportunities that they need"
Q: should the costs of education be examined? "most efficient education possible"
Schuster: "look at it more efficiently is part of the big picture of the commission"

Questions from audience
Q: lesson of the Level 4 schools?
Allen: first two Level 4 schools have exited, as we discussed with the School Committee last week, we seem to know what works
extended day, extensive professional development for teachers, I'm going to add wraparound services
recommendation to SC "taking a look at that low income increment"
can foundation budget reflect the practices that we've learned from the Level 4 schools?
Q: looking to establish a foundation to use charette meetings to solve problems; taking education costs out of property taxes
Schuster: foundation budget started to do that
Q (from Roberta Schaeffer): look at cost savings...
Zidelis: focus on cost drivers, attempting to mitigate
Q: is there an opportunity to combine administrative structures?
Allen: has discussed over past several years, schools could provide services to city; city could reduce our costs by providing that to us; administration open and willing to coordinate
Q: how does chapter 74 work?
Allen: chapter 74 recieves a higher amount per pupil; becomes part of overall budget
Q: Worcester an official refugee city: funding needed for that
dealing with a significant non-native speaking population
Allen: New Citizen Center on taking kids in
Forman: social-emotional support needed for those students above and beyond their academic needs
Q: reading tea leaves on foundation budget commission: Gateway Cities?
Schuster: way too early to tell
composition of commission will possibly change as well as governor
"This is the opportunity to influence the direction of the commssion"