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House passes FY05 budget

The House completed its version of the FY05 budget in the early morning hours of April 30.  

The budget calls for spending of approximately $22.5 billion plus additional spending for items such as pension fund payments and includes small increases for both preK-12 and higher education.  However, despite some increases in public education funding,  the total amount is still below what it had been in FY01 and FY02 even without taking inflation into account.  The  budget deficit of roughly $1.5 billion is closed mostly by using one-time revenues such as the rainy-day fund and  federal monies.  This structural deficit will continue into the next budget cycle since the House did not support a  substantial increase in revenues.

Public Higher Education

Notably, the budget did include on-going funding for the previously unfunded higher education contracts.  A  commitment also was made by House leadership to pay a portion of the retro-payments in a supplemental appropriation  before June 30.  When the contract funding and tuition retention are factored in, the UMass budget increased by 6.2  percent over FY04, the state colleges' budget went up 2.5 percent and the community colleges increased 1.5 percent  over FY04.

PreK - 12

The House voted to support a one-year charter school moratorium and set up a task force to devise legislation to  change the funding of charter schools.  Five charter schools that had been scheduled to open this fall will have to  undergo further review by the Board of Education before final approval would be granted.  The House also supported a  measure sponsored by Speaker Tom Finneran to set up a Board of Early Education and Care and a commission to begin  working on a plan to provide all children the opportunity to attend pre-school.  However, aside from money to  support the Board, no new monies were allocated to early childhood education.

No changes were made on the floor to the House Ways and Means proposal that included increased funding for special  education, regional school transportation, MCAS remediation and METCO.  State aid to local school districts -  Chapter 70 - was increased by $75 million from last year when it received a cut of $148 million.  On the House  floor, money was appropriated for a grant program to fund alternative programs for disruptive students.  However,  none of the funding for the early literacy, class size reduction programs or school transportation reimbursements  that were deleted from last year's budget were restored.

Employee Rights and Benefits

None of the governor's proposals to undo the current pension system -- erode collective bargaining rights or change  the state employees health insurance plan -- were adopted by the House.

Next Steps

The next step in the FY05 budget process is the Senate release of its proposed budget, which is expected the week of  May 10.  The Senate is expected to debate its version the following week.  After the House and Senate iron out their  differences, the budget is sent to the governor who has ten days to sign or veto provisions in the Legislature's  budget.  The Legislature intends to complete the FY05 budget process in time for the Democratic Convention the end  of July.

Below is a more detailed summary of the House FY05 budget.  The following amendments were added or proposed but not  included to the House Ways and Means version of the bill. 

PreK-12

• Charter School Moratorium -- adopted a moratorium on new Commonwealth Charter Schools and any new expansions  until July 31, 2005 or until a new tuition formula is enacted into law.  Also, the approval of five Commonwealth  schools that have been approved but have not yet opened is suspended pending a full review of the application and  approval process by the Department of Education.  A legislative "working group" is established to make  recommendations about changes in charter school tuition financing. 
• School Funding Reserve -- appropriated $5 million for schools experiencing extraordinary circumstances,  including increase in enrollment (so-called "pot hole" account).
• MCAS -- added $1 million to the MCAS remediation bringing that proposed funding up to $15 million for FY05  down from $50 million in FY02.
• Early Education -- established a new Board of Early Education and Care and sets up a commission to begin  work on a comprehensive system to provide pre-school to all children in the Commonwealth.
• Alternative Education -- restored $1million to a program to assist schools with disruptive student behavior.
• Medicaid Reimbursement -- amendment adopted to provide that schools will receive at least 50 percent of any  Medicaid reimbursements received by the city or town to provide funding for special education services.
• No Child Left Behind -- established a Commission to study the cost to Massachusetts (state and local costs)  to implement the federal NCLB law.  The Commission would include a representative of the MTA.
• Additional Special Commissions -- other special commissions established by the House budget include those to  study: middle level schooling (including a representative of the MTA); regional grief counselors for school  districts (MTA is included on the Commission); restrictions on "junk food" ads on school buses; child nutrition and  physical activity; reducing cost of transportation for students with disabilities; and recommendations to require  all children to attend school until age 18.

Public Higher Education

• Included on-going funding for the previously unfunded higher education contracts.  A commitment was also  made by house leadership to pay a portion of the retro payments in a supplemental appropriation before June 30.

  Operating Budgets -- Increases over FY04 *

  University of Massachusetts    6.2%
  State Colleges                          2.5%
  Community Colleges               1.5%

  * Contract funding and tuition retention are factored into these increases.

Other Amendments

• Adopted an amendment that directs the Board of Higher Education to engage in advocacy for public higher  education.
• Rejected an amendment that was judged to be unnecessary that would write into the law reference to Academic  Freedom.
• Adopted an amendment that would eliminate the current terminology of "underperforming" and require the  development of a performance improvement plan and timetable approved by the Board of Higher Education.
• Provided for $125,000 for support of the Labor Studies Programs at the Amherst, Boston, Dartmouth and Lowell  campuses of UMass.

Employee Rights and Benefits

The House rejected Governor Romney's proposals for "reforming" the public employee pension system as well as his  various proposals to decrease employee rights and benefits.

House actions relative to public employee pensions and benefits included:

• The creation of a special commission to study the pension system and to make recommendations.
• Rejected an amendment that would have imposed a $100,000 cap on public employee pensions.
• Rejected an amendment that would have eliminated the right to a termination retirement allowance for those  who are not reappointed, laid off, etc.
• Authorized, with collective bargaining rights, the Boston metropolitan cities of Cambridge, Chelsea,  Everett, Malden, Medford, Melrose, Quincy, Revere and Somerville together with Boston to group purchase employee  health insurance and solidified bargaining rights of other municipal employees, including teachers, who are  currently insured through county sponsored joint purchasing group health insurance plans.
• Requires the Public Employee Retirement Administration Commission (PERAC) to conduct an impact study on the  cost of increasing the base to $22,000 on which retiree COLAs are calculated.
• Directs that state employees, including those in higher education, whose job functions have been transferred  from one department or agency to another, will retain their wage, seniority, collective bargaining and civil service  rights upon being transferred to the new employing department or agency.  (Implementation guidelines are not spelled  out in the proposed language so additional analysis needs to take place).

MTA-backed employee benefit amendments that were not adopted include:

• Replacing two of the governor's appointments to the Group Insurance Commission (GIC) with two employee  representatives, including the MTA.
• Providing for a statewide HMO option for K-12 retirees enrolled in the GIC's Retired Municipal Teachers  Plan.
• Reopening the Retirement Plus application "window" for those teachers whose application forms were not  forwarded by local officials to the Massachusetts Teachers Retirement Board (MTRB) in time before the original  application window closed.

In each instance, legislative leadership directed that these matters follow the traditional bill enactment rather than being attached as riders to the state budget.