Final state budget for FY12 is signed

On July 11, the governor signed the 2012 state budget for the new fiscal year. The $30.6 billion budget represents the fourth year in a row of budget cuts as a result of the recession and declining revenues. In FY11, federal stimulus funds helped the state provide needed funding for essential services, but such funding is not available this year.

Budget Spreadsheets The budget gap between maintaining current services and expected revenues is nearly $2 billion. In order to have a balanced budget as required by law, the governor and the Legislature chose to make significant cuts to local aid, higher education and safety net programs rather than to increase state revenues.

The loss of federal monies that helped protect higher education last year is not made up by state dollars this year. As a result, there was a final cut of 6.6 percent ($61.5 million) to college campus accounts.

Chapter 70 spending for preK-12 is slightly more than in FY11. Local aid was initially cut by 7 percent for all communities. However, due to unanticipated revenues at the end of the fiscal year, there will be additional funds going to cities and towns this fall, up to $65 million. Early education sustained a small cut, while most education grant programs are level-funded, with several increases to mitigate the cuts to local aid.

The final budget for Chapter 70, local aid, higher education and most grant programs is essentially the same as that originally proposed by the governor in House 1.

Municipal Health Insurance

Language modifying the way municipal health insurance is negotiated was included in both the House and Senate versions of the budget. On July 1, the Legislature passed the House/Senate conference budget. The proposal included a plan that was opposed by the Public Employees’ Coalition on Municipal Health Insurance, in which the MTA is a key player. We asked the governor to provide additional protections through an amendment.

On July 11, the governor sent the Legislature amendments providing greater protection from excessive out-of-pocket expenses for the sickest employees and retirees, increasing labor’s voice in the process and further protecting the quality of plans offered by municipalities. On July 12, the governor signed the amended version of the legislation, which will save Massachusetts cities and towns an estimated $100 million in the first year.

[More on the municipal health insurance provisions.]

PreK-12 Education

Chapter 70 – State Aid to Local School Districts
Chapter 70 is reduced from current FY11 funding levels (from $4.47 to $3.99 billion, a decrease of $82 million) as a result of the loss of $221 million in federal stimulus money. The state’s share of Chapter 70 in FY11 was $3.85 billion. While Chapter 70 funding was cut, the funding is sufficient to keep all school districts at the required foundation spending levels.

Other Local Aid – Unrestricted General Government Aid
In addition to Chapter 70 funds, cities and towns receive state funds through local aid. In some communities, as much as 50 percent of this other local aid helps pay for public schools. The FY12 budget funds local aid to cities and towns (Unrestricted General Government Local Aid) at $834 million. This is a $65 million decrease from FY11 and will be restored when unanticipated revenues from FY11 go to cities and towns in the fall.

PreK-12 Education Grant Programs

  • Special Education Circuit Breaker: The final budget funds the Special Education Circuit Breaker program at $213 million, an $80 million increase from the current FY11 budget.
  • Regional School Transportation: Funding has been increased by $3 million over the FY11 level of $40.5 million, to $43.5 million.
  • MCAS Supports: There is an increase of over 5 percent from FY11, from $9 million to $9.5 million.

Most other line items were level-funded at the FY11 level, including:

  • Full-Day Kindergarten, which is funded at the FY11 level of $22.9 million.
  • Expanded Learning Time, which is funded at the FY11 level of $13.9 million.
  • METCO, which is funded at the FY11 level of $17.6 million.

Early Education and Care
The final budget makes a small cut to the budget for Early Education and Care, reducing funding by $3.6 million to $506.6 million, a reduction of less than 1 percent.

Higher Education

Campus Line Items
The budget funds each campus at a level which, with assumed tuition retention, holds each campus at its FY11 state appropriation. This is a cut of 6.6 percent, or $61.5 million, since federal stimulus monies used in FY11 to fund higher education will not be available in FY12. This means a 6.6 percent cut to the University of Massachusetts, an average cut of 5.7 percent cut to our state universities and a 7.5 percent cut to each community college.

Scholarship Program
The program is funded at $87.6 million, down $1.9 million from the FY11 budget, a 2 percent cut. This cut apparently helped to fund a new line item, the “Performance Management Set Aside” of $2.5 million to begin to implement the Board of Higher Education’s “Vision Project.”

Employee Benefits

Cost of Living Adjustment (COLA): The budget provides for a 3 percent increase on the first $12,000 in pension benefits for retired state employees.