Yes, we send state funding to districts that aren't in need

The Mass Business Alliance for Education along with the Greater Boston Chamber of Commerce today released a report about the shares of state funding that go to districts that aren't in need, presenting this as a contributing to the growing gap among districts, and one we can ill-afford during the pandemic. You can read WBUR's coverage here and State House News Service's here.

The funding streams here being discussed are hold harmless and minimum aid, the 17.5% minimum state contribution towards district foundation budgets, and below effort gap funding (which is both less of an issue and mainly ends up being progressive, so less here about that).

To take these entirely out of order: the 17.5% minimum aid I have always heard argued as "this way everyone has some skin in the game." But, here's the deal: 

...it's really tough to argue that Cambridge getting 6% of its budget from the state makes it particularly interested in how the state funds, say, Holyoke (save Cantabrigians being interested out of the goodness of their hearts, of course). And it's also hard to argue that anyone is being particularly well-served by the state being required to fund that portion of Cambridge's budget.

I'm picking on Cambridge, incidentally, because Cambridge can fund their foundation budget entirely out of local resources more than twice over. That puts Cambridge in a very rare class, but there are many districts that can fund their foundation budgets and more entirely through local resources. As the report says: 

Of these 157 municipalities, 104 can fully meet their foundation budget obligations from local revenue; the other 53 can fund between 82.5% and 100% of their foundation budget from local revenue, according to the state’s calculation

As a result of the state funding what they do, those districts simply have additional resources to spend on schools; local communities don't reduce their local funding due to the state aid.

As I have discussed when we have talked about Boston before, there are districts--add here Cambridge and Somerville--that are both well-resourced and have lots of children in need. As I note in that post, contrary to the footnote in the report, the needs of the district are included in the calculation of the foundation budget just as they are for every other district, so to calculate from that is the calculate from an equitable place. 

That's the one that's a little more straightforward, to my mind, that the other big one here, which is hold harmless and minimum aid. As I mention in the above post, there's no district that is a greater beneficiary of that than Boston (not a surprise: it's the largest district, but also not a poor one). It's also, though, what has been keeping many smaller, rural (and not as rural) districts with declining enrollment afloat. I've shared this slide from Granby before: 

That big space over the line is the amount of required spending over the foundation budget; the reason a district ends up being required to spend more than its foundation budget is if it's getting that additional money as state aid. That would be hold harmless and minimum aid. This is how we end up with districts that are required to spending 125% and such of their foundation budgets.

It's been well covered here and elsewhere, of course, that a decline in student enrollment doesn't lead to a decline in costs in any sort of a straight line. Losing, for example, ten or twenty students from across the entire enrollment doesn't mean you can cut a teaching position, let alone close a building. 

At the same time, smaller districts carry some of the same costs as larger districts do==you still need a building and custodians and a superintendent and school nutrition staff--and that can make smaller districts expensive, on a per pupil basis to run. 
There isn't a neat and tidy answer to this--and anyone who thinks there is may not realize quite how much space some of our districts in western Mass already occupy. There is, of course, the report due (do we know if any of that work is actually still happening?) that looks at rural schools as part of the Student Opportunity Act. 
I do, though, want to issue a preliminary warning to any who would argue that you can't possibly operate only on a foundation funded budget that some of us already do, which is not to say I recommend it. 

The main point here, of course is that:

• Massachusetts prides itself on a progressive funding system for schools.
• These are not progressive funding streams.
• The state says it doesn't have enough funding for education (or anything) right now.
• These are luxuries we as a state can't afford.

That doesn't mean that this would be popular. That doesn't mean it wouldn't be right. 

I should also note that this was the final of the recommendations Bruce D. Baker, Mark Weber, and Drew Atchison wrote of back in June in Kappan.