Email today from the Massachusetts Municipal Association –
LEGISLATURE SET TO APPROVE $52.7B FY23 BUDGET,
WITH MAJOR INVESTMENTS IN MUNICIPAL & SCHOOL AID
• LEGISLATURE’S BUDGET INCREASES UNRESTRICTED GENERAL GOVERNMENT AID BY $63M (5.4%) – A WIN FOR CITIES AND TOWNS!
• INCREASES CHAPTER 70 BY $485.2M ABOVE FY22, FUNDING THE STUDENT OPPORTUNITY ACT ON ITS ORIGINAL (PRE-COVID) SCHEDULE
• DOUBLES NEW FUNDING TO MINIMUM AID DISTRICTS TO $60 PER STUDENT
• INCREASES CHARTER SCHOOL REIMBURSEMENTS BY $89.2M
• INCLUDES $441M TO FUND THE SPECIAL EDUCATION CIRCUIT BREAKER
• ADDS $10M TO PILOT, BRINGING THE PROGRAM TO $45M
• INCLUDES $5.5M FOR RURAL SCHOOL AID
• INCLUDES $82.1M FOR REGIONAL SCHOOL TRANSPORTATION
• ADDS $20M TO STATE’S COMMUNITY PRESERVATION ACT MATCH
OTHER BREAKING NEWS: REMOTE MEETING EXTENSION BILL SIGNED INTO LAW BY LT. GOV. POLITO ON SATURDAY – Cities and towns now retain the option to hold public meetings remotely through March 31, 2023, following the same guidelines that have been in place since the COVID public health emergency was first declared. With Gov. Baker out of state over the weekend, Lt. Gov. Polito (as Acting Governor) signed the bill, which took effect immediately. MMA pushed hard for this extension, and successfully advocated against attempted amendments that would have burdened communities with unfunded mandates.
July 18, 2022
Dear Osler L. Peterson,
Last night, Sunday, July 17, the fiscal 2023 state budget conference committee released H. 5050, the House-Senate compromise budget bill. The House and Senate have scheduled formal sessions for Monday, July 18, and both chambers are expected to pass the measure at that time. The Governor will then have 10 days to approve the spending appropriations and proposed law changes, veto, or return any items with amendments. That will give lawmakers several days to consider overriding any vetoes before formal sessions end on July 31.
Following months of state tax collections exceeding expectations, the $52.7 billion fiscal year 2023 state budget plan reflects an agreement between Senate and House leaders to increase tax collection estimates for fiscal year 2023 by $2.66 billion, with $1.9 billion available for the general budget after statutorily required transfers. As a result, all key local aid accounts received the higher funding levels in areas where the Senate and House needed to resolve differences.
In a major win for cities and towns, the Legislature’s budget bill increases Unrestricted General Government Aid (UGGA) by $63 million (5.4%), a major priority pushed by MMA throughout the budget deliberations. This will double the municipal aid increase originally proposed by the Governor in January. In addition, the budget would also significantly increase Chapter 70 school aid over fiscal year 2022, bringing the total to nearly $6 billion. The budget includes a $67 million increase for Special Education Circuit Breaker, an additional $89 million for Charter School Mitigation payments, and an increase of $10 million for Payments-in-Lieu-of-Taxes for state-owned land (PILOT).
You can find the Chapter 70 and UGGA amounts for your community in Section 3 of H. 5050, beginning on page 302 of the downloadable PDF (see the link below this line).
Unrestricted General Government Aid (UGGA)
In a major win for local government, the conference committee report includes $1.23 billion for Unrestricted General Government Aid (line item 1233-2350 and section 3), an increase of $63 million, or 5.4%, over the fiscal 2022 level of funding, which is double the $31.5 million increase originally proposed by the Governor in January. Increasing UGGA has been a key MMA priority throughout the process. With property taxes tightly capped by Proposition 2½, cities and towns rely on state revenue sharing to provide municipal and school services, ensure safe streets and neighborhoods, and maintain vital infrastructure. These services are fundamental to our state’s economic recovery, success and competitiveness. Unrestricted General Government Aid is the revenue sharing program that cities and towns receive to fund essential municipal services.
The Legislature’s budget would fund Chapter 70 aid at nearly $6 billion, representing a commitment to fund the Student Opportunity Act (SOA) according to the original intended schedule, a solid achievement given the initial disruption caused by COVID’s economic disruption. In addition to keeping the commitment to fund the SOA, the Legislature recognized the challenges facing 135 “minimum aid” districts that would have received only a $30 per student increase over the previous year under the budget filed by the Governor in January. MMA applauds the Legislature for doubling the minimum aid increase to $60 per student.
Special Education Circuit Breaker
H. 5050 provides $441 million for Special Education Circuit Breaker (7061-0012), which reimburses school districts for the high cost of educating students with disabilities. This amount reflects an increase of $67 million over the current fiscal year. The Student Opportunity Act expanded the circuit breaker by including out-of-district transportation, to be phased in over three years. The fiscal 2023 budget reflects years two and three of the schedule in the Student Opportunity Act, achieving full funding one year ahead of schedule.
Charter School Mitigation Payments
To address charter school mitigation payments, H. 5050 includes $243 million for charter school mitigation payments (7061-9010), which represents an increase of $89.2 million over the current fiscal year. This funds the state’s statutory obligation for charter school mitigation payments as outlined in the Student Opportunity Act, pushing the state to phase in the plan by fiscal 2023, a full year ahead of schedule.
The Legislature’s budget level funds regional school transportation at $82.1 million, representing a reimbursement rate of 85% of DESE’s estimated costs for FY23. H. 5050 fully funds the McKinney-Vento account for transportation of homeless students at $22.9 million, and level funds out-of-district vocational transportation at $250,000.
Recognizing the importance of Payments-in-Lieu-of-Taxes (PILOT) for state-owned land, H. 5050 increases the line item to $45 million (a $10 million increase over fiscal year 2022). This has been a key priority for many years. Low PILOT funding has created a significant hardship for smaller communities with large amounts of state-owned property, and this 29% increase is very welcome news, and will provide an important boost.
Rural School Aid
Rural School Aid (7061-9813) is funded at $5.5 million in H. 5050, providing rural school assistance to eligible towns and regional school districts. These grants will help schools facing the challenge of declining enrollment to identify ways to form regional school districts or regionalize certain school services to create efficiencies.
Outside Section – Retiree COLA Provision
Section 134 of the budget would allow retirement boards that have accepted Section 103 of Chapter 32 to award a cost-of-living-adjustment of up to 5% to retirees, rather than the current limit of up to 3%. While MMA appreciates the concern driving this provision, we opposed this section due to the potential negative impact on unfunded pension liabilities. Most communities in the state participate in regional pension systems, and do not have direct decision-making authority regarding adoption of a higher COLA. Adoption of a higher COLA, even if limited to one year, would permanently increase the pension obligations for all participating communities, requiring increased annual appropriations to fund the cost. We encourage local officials to contact their retirement boards to discuss the financial implications of adopting a higher COLA for fiscal 2023.
Outside Section – Community Preservation Act
Section 174 of H. 5050 directs the comptroller to transfer $20 million of the fiscal year 2022 budget surplus to the Massachusetts Community Preservation Trust Fund. This provision would increase the state’s match from an estimated 35% to 43%, approximately the same state match percentage as fiscal year 2022. The number of CPA communities has reached 187, and this budget item will benefit cities and towns that have adopted higher local property taxes to address environmental and housing challenges.
THE LEGISLATURE’S BUDGET IS GOOD NEWS FOR CITIES AND TOWNS
Please call your Representatives and Senators and thank them for the important and much-appreciated municipal and school investments that are included in the Legislature’s budget bill. This has been a tumultuous time for state and municipal finances, and the Legislature is advancing a spending plan that invests in communities, which is much appreciated.
If you have any questions or need additional information on any municipal aid priority, please contact MMA Senior Legislative Analyst Jackie Lavender Bird at 617-426-7272 ext. 123 or email@example.com.
Massachusetts Municipal Association
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