I regret to inform you that we are going to need to talk about FY25

 And we're off! 

The Swifty Swine Racing Pigs from the Eastern States Exposition (photo mine)

While I usually consider the "official" start of the next fiscal year discussion to be the Consensus Revenue Hearing (this year scheduled for December 4 at 1 pm; mark your calendar!) when the Joint Committees on Ways and Means together with the Secretary of Administration and Finance from the Governor's Cabinet hold a hearing to discuss how much money the state will have next year, I'm going to kick off the blogging  on this a little early this year, because, all, we need to have a discussion about what we know so far. 

Note, incidentally--check where you are!--that this is offered not in my professional capacity at all.

I want to flag three things for us to be paying attention to now.

ESSER is ending. 
Let me hasten to add: WE ALREADY KNEW THIS. Seriously, anyone who has been anywhere near a school budget knows that all ESSER funding remaining (that's ESSER III) has to be obligated by September of 2024*. Since the vast majority of any school district's spending in a fiscal year (starting July 1) happens AFTER September, that means that that this current (FY24) year, through next summer is really the chance to spend it. 
Again, we knew this. 
It does mean, though, that any remaining ESSER spending that isn't one time (HVAC fixes, buses, curriculum, masks, cleaning supplies) or short term (a one or two time summer program), either needs a new way to be funded--this is probably going to be the general fund--or is going to be cut. 
Again, I don't think that this is going to surprise school business officials, superintendents, or school committees. For members of the public that maybe thought a summer program might continue, or an after school program was longer term, it might come as a surprise. 
I am mostly, honestly, putting this one here out of obligation, incidentally. We've had alarmist headlines since day one on ESSER, most of which have been very far removed from district-level decision-making, and so this has been, I think, poorly communicated from those outside of school districts from the beginning. 
And if you are in a school district, I'd recommend being sure your community understands where you're at with ESSER and what it ending is going to mean for your district.

Okay, on to the new stuff...

Revenue is looking kind of iffy. 
Let me start by noting here that projecting budget revenue is absolutely not my job and thank goodness. One thing you learn, though, if you hang around enough state consensus revenue hearings** is that there's really only so much we actually know about how much money we're going to have next year. Those who make these projections draw on what is known, what past experience has been, try to fill in what we don't know...and they make their best prognostication based on that.
One thing on which they draw is what is currently happening with state revenue now. 
You may have missed it, as it happened the same day Congressional Republicans were challenging people to fistfights, but the most recent revenue numbers, for the first four months of FY24, are running behind projections (that's State House News shared by the Franklin Chronicle) (already):

Massachusetts' tax revenue collections are $355 million behind where state government expected them be four months into fiscal year 2024 and while Administration and Finance Secretary Matthew Gorzkowicz said Tuesday he's not especially worried, a key lawmaker said less than an hour later that he is "very concerned" about the state's fiscal picture.

Who is concerned? The Senate Ways and Means Chair:

Rodrigues, who has been the Senate's budget lead for nearly five years, said this is the first stretch during his time as Ways and Means chairman that tax collections have missed benchmark four months in a row. Coming up short by a cumulative $20 million after two months was not worrying, he said, but September and October's shortfalls raised his eyebrows.

He said the latest revenue numbers have been "quite disconcerting," even though the consensus revenue growth figure he, Gorzkowicz and House Ways and Means Chairman Aaron Michlewitz agreed to for fiscal year 2024 is a "very conservative" 1.6 percent increase.

"We are still falling short of that to date. So we are very concerned, which means that we are very, very careful," Rodrigues said as part of his detailing of the supplemental budget before the Senate.

As Rodrigues noted, the projection they used for this year's budget was a very conservative 1.6%; if you look back at what the testimony was in the hearing, that wasn't where everyone was. And we're coming in below that.

Now, let me note that I am not sounding the "OMG FOUNDATION AID" claxon on this one, as yet. The foundation aid in Chapter 70 tends to be one of the strong legislative commitments from the state, and then tend to be loath to touch it. 
I'm just saying this isn't a comfortable spot to be in November.

The inflation rate for the foundation budget is going to be low. 

I said this at the November Charting the Course, and one of the new members looked at me as if I had done a magic trick to know this already, so let's do a quick explainer:

The inflation percentage on which the foundation budget is calculated isn't the "inflation" you see in headlines. It's--and stay with me here!--the rate of change (that's division) between the third quarter of the prior year (if we're calculating FY25, we're using fall of 2023, as this is calendar year) and the third quarter of the year before that (so fall of 2022) of the implicit price deflator for state and local governments.
And what's that? That's a measurement of how much state and local governments are spending, quarter over quarter, and year over year.

And change going to be a little over one percent.***
If you think about it, it does make some sense that this would have slowed down from last year, right? The federal pandemic aid is being used up (state and local, remember), and so that big push we had to make sure that a) all the money got spent but also b) the needs were being met has waned. And I'm sure there are those who make their living writing on this who would have more to say.

What it does mean for us, as was noted in Noah Berger of the MTA's testimony before the Board of Ed yesterday, is that the increase in state aid to education, unless the Legislature uses a different number, is going to be less. Not the aid itself: the increase.

We are still going to, assuming the implementation schedule is followed, see increases due to the Student Opportunity Act increases in low income and EL support, and the final increase in the percentage for assumed special education needs. 
But the main changes in the foundation budget underlying the changes due to the Student Opportunity Act always are enrollment changes from one year to the next in your district, and the inflation rate. 

The Governor and the Legislature could, of course, use a different number. They rewrite the law to pass the budget every year (literally), so this could be a thing they could do differently if they wish.

For now, though, consider this on your radar screen. 

As always, if you have questions on any of the above, which again, is my personal writing and not to be ascribed to anyone/thing else, send them along!

________________

* the deadline to liquidate the funds is January 28, 2025. That's when you have to have actually paid any remaining bills by, or the money gets pulled straight back and isn't yours anymore. But we have known this, too.
**you have your hobbies; I have mine.
***see line 26.