Governor’s budget increases funding across the board
On January 22, Governor Deval Patrick released House 2, the final budget of his tenure. The budget proposes spending $36.4 billion for the fiscal year beginning July 1. This is close to a 5 percent increase over current spending levels. The governor’s plan invests in education, from early childhood through graduate school, and includes the Foundation Budget Review Commission, a legislative priority of the MTA similar to a bill co-sponsored by the chairs of the Education Committee.
Each year the Administration and the Legislature work with leading economists in the Commonwealth to estimate the amount of tax revenues that will likely be available for the budget in the coming fiscal year. This is called the consensus revenue process, and it establishes the basic economic parameters of the budget for that fiscal year.
This year’s budget is built around an expectation that tax revenues will grow by $1.14 billion (4.9 percent) over last year and will total an estimated $24.34 billion. These revenues provide the majority of the funding for the FY15 budget, which the governor’s budget request sets at $36.4 billion. The difference between estimated revenues and the budget total is accounted for largely through revenues the state receives from the federal government, but it also includes revenue from state-run trust funds, fees, reforms and limited-time revenues. The governor has proposed raising revenues by a modest $154 million.
Almost every area of the budget receives additional funding over FY14, including human service workers and elder home care, as well as funding for a cost-of-living adjustment for current retirees.
House 2 increases Chapter 70 aid – state aid for preK-12 education to municipalities and regional schools – over FY14 spending levels by 2.1 percent, to an all-time high of $4.4 billion. This ensures that every district’s foundation budget is fully funded. Efforts to help close the achievement gap in the state’s Gateway Cities receives $1.25 million, $750,000 for dual enrollment and $500,000 to launch re-engagement centers aimed at providing students with alternative pathways to graduation.
For public higher education, the governor is recommending an additional $64 million (an average increase of over 6 percent for campuses) distributed among the University of Massachusetts system, the state universities and the community colleges.
Early education received an increase of $45 million (9 percent) for FY15. Included are increases in funding for kindergarten expansion grants for communities without full-day kindergarten and an additional 1,700 slots for low-income children to attend preschool.
Below is a summary of the key elements of the budget that affect public education. For more specific information, click here to view the budget charts. For additional information, please go to the overall analysis of House 2 by the Mass Budget and Policy Center by clicking here.
Chapter 70 – State Aid to Local School Districts
The governor proposes to increase Chapter 70 funding by about $100 million over FY14, an increase of more than 2 percent. This increase includes fully funding the current foundation budget for each school district, which accounts for most of the increase and is statutorily required to be funded under current law. The proposal also:
- Ensures $25 per pupil over FY14 aid for each school district.
- Continues the phase-in of the formula changes that began in the FY07 budget, which was stalled during the fiscal crisis. A key element of these changes is that when complete, all districts will receive Chapter 70 funds to cover at least 17.5 percent of their foundation budgets.
- Includes all preK students now attending public schools in district foundation budgets.
PreK-12 Education Grant Programs
Overall, House 2 proposes to spend about the same amount of state money on preK-12 education grant programs as it did in FY14. Many programs are level-funded, but some programs are reduced or eliminated. Other programs would see increases. In addition, the governor proposes to fund several new programs.
Programs proposed to be funded at current funding levels include:
Special Education Circuit Breaker – FY14 funding of $252 million proposed for FY15
Regional School Transportation – FY14 funding of $51.5 million proposed for FY15
Charter School Reimbursement – FY14 funding of $75 million proposed for FY15 (This amount only funds 70 percent of the required reimbursement to cities and towns for charter school tuition.)
Programs proposed to receive increases include:
Kindergarten Expansion Grants – a $3.1 million increase proposed over FY14 (from $23.9 million to $27 million, a 13 percent increase)
Extended Learning Time Grants – a $4 million increase proposed over FY14 (from $14 million to $18 million, a 28 percent increase)
Innovation Schools – a $3.6 million increase proposed over FY14 (from $1 million to $4.6 million, a 360 percent increase)
Student Assessment – a $5 million increase proposed over FY14 (from $24 million to $29 million, a 21 percent increase)
Programs proposed to be cut or eliminated include:
MCAS Low-Scoring Support – a $3.3 million reduction from the amount proposed for FY14 (from $9 million to $5.7 million, a 36 percent decrease)
Gateway Cities and New Programs
Two Gateway Cities programs proposed to be funded by House 2:
English Language Learners in Gateway Cities – an increase of $500,000 is proposed for this program over FY14, from $3 million to $3.5 million, a 16 percent increase
Gateway Cities Career Academies – governor proposes to level-fund this program at $500,000
New programs proposed to be funded by House 2:
Dropout Re-engagement Centers – proposes to fund this new program at $500,000
Early College Initiative – proposes to fund this new program at $750,000
STEM Teacher Corps – proposes to fund this new program at $250,000
School Building Assistance – an increase of about $50 million is included in this budget.
Foundation Budget Review Commission
The governor includes language in his budget proposal nearly identical to MTA’s priority legislation, H457 and S207, An Act to Revive the Foundation Budget Review Commission. Like the legislation, the governor’s budget language would reconstitute the Foundation Budget Review Commission, first established in the Education Reform Act of 1993, to ensure that the foundation budget is reviewed at least once every four years and updated, if necessary. It requires a review of the foundation budget and puts the Legislature in control of the process and outcome. The commission is chaired by the Education Committee’s co-chairs. The governor’s language requires the commission to complete its work by Dec. 31, 2014.
The charge of the commission is to determine the educational programs and services necessary to achieve the Commonwealth’s educational goals, as well as to determine how resources can be used in the most effective manner. Unlike previous proposals, this commission would review relevant reports and data only and would not undertake an independent cost study.
Other Local Aid – Unrestricted General Government Aid (UGGA)
The major category of non-education local aid was level-funded.
House 2 proposes increasing funding for public higher education institutions by $63.4 million over FY14. This represents an increase of over 6 percent, varying by campus. The governor has stated that this should ensure that the University of Massachusetts and other public colleges and universities can freeze tuition rates and fees for another year.
Scholarship Programs – level-funded at $90.7 million
Early Education and Care
The governor’s budget increases funding for early education and care programs by nearly $45 million over FY14, a 9 percent increase.
Funding is proposed to be increased for these child care programs:
Supportive Child Care – an increase of $4.2 million over FY14 (from $76.9 million to $81.2 million, a 5.5 percent increase)
TANF-Related Child Care – an increase of $8.4 million over FY14 ($128 million to $136.5 million, a 6.6 percent increase)
Low-Income Child Care – an increase of $27.5 million over FY14 ($214 million to $241 million, a 13 percent increase)
In addition, the budget proposes to fund three new programs:**
Birth Through Pre-School – funded at $15 million
K1 Classroom Grant Program – funded at $2 million
Quality Rating and Improvement Systems – funded at $2.5 million
**Note: It is not clear whether these programs are completely new or whether they were previously incorporated into other line items. For example, two programs that are proposed to be eliminated are Provider Quality Investments (funded at $150,000 in FY14) and the Pre-School Initiative (funded at $15 million in FY14).
Governor Patrick proposes increasing revenues by approximately $154 million in FY15 and approximately $184 million annually thereafter through the following mechanisms:
- Addressing a loophole related to non-insurance subsidiaries of insurance companies. This would result in an additional $8.4 million in tax revenues in FY15 and $14 million annually thereafter.
- Closing a loophole related to security corporations that raises $21 million in tax revenues in FY15 and $35 million annually thereafter.
- Applying the hotel tax to the full price of a hotel room sold by an Internet hotel reseller, which would raise $8.1 million.
- Applying the room rental tax to various short-term accommodation rentals that currently are exempted from the tax. These include short-term rentals of corporate executive apartments, B&B rooms, vacation condos and time shares. The Patrick Administration estimates that this tax law clarification would raise $2.6 million in FY15 and $6.8 million annually thereafter.
- Applying the sales tax to candy and soda, generating an estimated $67.8 million in FY15 and $74 million annually after that.
- Postponing a special tax break available to certain companies when combined reporting was implemented. This is an accounting rule called FAS 109. This delay would raise an estimated $45.8 million in FY15. (It also assumes further delay of special tax break —FAS 109 — beyond FY15)
- Additionally, Governor Patrick budgeted $24.2 million from an expanded bottle redemption law (a proposal voters will likely consider on the November 2014 ballot).
Teacher and State Employee Pension Funding – The budget increased funding for the pension system by 10 percent, now totaling more than $1.79 billion for FY15. This investment, on top of a strong year for pension investment returns (a more than15 percent increase), is helping to ensure that this important fund will continue to meet the needs of retirees and provide an excellent value to the citizens of the Commonwealth.
Cost-of-Living Adjustment (COLA) – The governor’s budget provides for a 3 percent increase on the first $13,000 in pension benefits for retired state employees.
Group Insurance Commission (GIC) – There were no changes in the percentage of premiums paid for active or retired members’ health insurance.