Published in the July 10, 2015 edition
MELROSE — City education officials and Melrose’s Beacon Hill delegation have long fought for change in the way the state determines how school programs are to be funded.
They have decried the unfair formula used to determine so-called Chapter 70 funding as it relates to the foundation budget. Included in last year’s state budget was a move to create a Foundation Budget Review Commission to determine ways to better calculate cities and towns’ foundation education budgets, and how much the state should contribute to them.
Last week, the Foundation Budget Review Commission released a preliminary report, and has asked the Legislature to continue working up to November 1.
As part of its preliminary findings, commission members wrote:
“The Education Reform Act of 1993 established the foundation budget to ensure adequate funding for all students in Massachusetts. Since them, some of the assumptions contained in the formula for calculating the foundation budget have become outdated. In particular, the actual costs of health insurance and special education have far surpassed the assumptions built into the formula for calculating the foundation budget. As a result, those costs have significantly reduced the resources available to support other key investments.”
Regarding health insurance costs, commission members find that statewide, district spending on “employee benefits and fixed charges” exceeds the foundation budget allotment by more than 140 percent.
“This,” commission members write, “is primarily due to the dramatic growth in health insurance costs nationwide and the fact that such costs have increased at a significantly higher rate than the rate of inflation used to adjust the foundation budget. In addition, the ‘employee benefits and fixed charges’ component of the foundation budget does not include retiree health insurance,” even though communities like Melrose incur such costs.
The commission recommends that the employee health insurance rate be adjusted in the “employee benefits and fixed charges” component of the formula to reflect the average Group Insurance Commision rate.
Also, the commission recommends adding a new category for “retired employee health insurance” to the foundation budget and to establish a separate health care cost inflation adjustor for the employee health insurance portaion of the “employee benefits and fixed charges” component of the formula, based on the change in the GIC rates.
Regarding special education costs, the commission found that foundation enrollment “accounts for the additional costs of providing special education services through an assumed rate of district enrollment, rather than an actual count of students. The district’s foundation enrollment is multiplied by 3.75 percent to add additional special education resources to the foundation budget. This translates to an assumption that 15 percent of students receive in-district special education services 25 percent of the time. In actuality around 16 percent of students receive some level of in-district special services statewide, which suggests that the foundation budget understates the number of in-district special education students.
“Out-of-district special education enrollment is assumed at 1 percent of foundation enrollment, which mirrors the rate of out-of-district special education placements statewide. However, districts spend far more on special education tuition for out-of-district placements than what is allocated through the foundation budget. In fiscal year 2013, actual costs were 59 percent higher than the foundation rate of $25,454,” members write.
They made the following recommendations on special education funding:
• Increase the assumed in-district special education enrollment rate from 3.75 percent to 4 percent (for non-vocational students) and from 4.75 percent to 5 percent for vocational students.
• Increase the out-of-district special education cost rate to capture the total costs that districts bear before circuit breaker reimbursement is triggered. “One example of how this might be done is to increase the out-of-district special education cost rate by an equal amount to the following: [4 times the statewide foundation budget per-pupil amount] minus [statewide foundation budget per-pupil amount] plus [out-of-district special education cost rate].” This would be a one-time adjustment, with the resulting rate increased by inflation each year thereafter.
In the coming months, the Foundation Budget Review Commission intends to review the following issues: in-district special education cost rate; low-income increment; English Language Learners increment; mental health/wraparound services; extended learning time; technology; full day preschool; K-3 pupil to teacher ratios, and operations and maintenance.
In a release, state Sen. Jason Lewis — part of Melrose’s Beacon Hill delegation — applauded the preliminary findings.
“The Commission’s report validates what many of us have been saying for years: that health insurance and special education costs far exceed what is assumed in the Chapter 70 formula,” said Lewis. “As a result, the state has not been providing adequate Chapter 70 funds to meet the needs of our students and schools.”
“The findings and recommendations of this blue ribbon Commission are a significant step forward in updating and reforming the Chapter 70 formula,” added Lewis. “The goal should be to ensure adequate and equitable funding for all our schools, and I’m hopeful that this report will move us closer to reaching this goal.”
