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July 6, 2021
The Greater Boston Chamber of Commerce and the Massachusetts Business Alliance for Education (MBAE) submitted joint testimony on S.355, An Act increasing the Commonwealth’s share of the education foundation budget, offered by Senator Jason Lewis. This bill incrementally reduces the total state target local contribution from 59% of the total state foundation budget to 54% by 2025, resulting in an increase in Chapter 70 state education aid provided to school districts. To enhance lower-wealth communities’ efforts to close achievement gaps and address unmet student need, our organizations urge you to confront existing inequities in the state aid distribution formula alongside S.355 and any other efforts to change how the state distributes state education aid.
As the Commonwealth begins phasing in components of the Student Opportunity Act, municipalities across the state will need to increase their required local contributions to fund higher foundation budgets. Yet, many lower-wealth communities have limited fiscal capacity to increase their local share of the foundation budget. S.355 seeks to soften the impacts of the increased required local contribution on lower-wealth communities by lowering the total state target local contribution, and in effect, providing more Chapter 70 state aid.
Although S.355 alleviates funding pressures facing lower-wealth communities, it does not address existing formula inequities that subsidize wealthier districts at the expense of lower-wealth communities. As our organizations found in a 2020 report titled Missing the Mark, $778 million, or 14 percent of total Chapter 70 state aid in the FY 2021 budget proposal, was distributed to school districts without regard to student or community need as determined by the state formula. Sixty-four percent of this aid, approximately $498 million, went to the wealthiest 20 percent of school districts in the Commonwealth.
This inequity is caused by several components of the Chapter 70 state aid formula that are not based on student or community need. These needs-blind factors – including minimum aid, the hold harmless provision, and the 82.5% cap on required local contributions – provide state aid to wealthier districts that, based on their community’s wealth and income, can fully fund their schools with less or no state aid. In FY 2021, 104 out of 351 municipalities had the resources to fully fund their foundation budget from local revenues alone.
Moving forward with the increased state education funding share proposed in S.355 without addressing the current inequities in the state aid formula will increase the amount of non-needs-based aid provided to wealthier districts while decreasing the progressivity of the formula. As such, any changes to the state share should only be done in tandem with modifications to non-needs-based formula factors – specifically minimum aid, the hold harmless provision, and the 82.5% cap on required local contributions – that will serve to direct a greater share of state aid and a greater amount of fiscal relief to lower-wealth communities.
The Missing the Mark report includes three recommendations pertaining to the local required contribution cap, the hold harmless provision, and minimum aid that make the Chapter 70 aid distribution formula more equitable. We urge the committee to consider these recommendations alongside S.355 and any other proposed changes to the state aid formula.
First, the proposed change to the total state target local contribution should be paired with an increase in the maximum local contribution share. The current cap of 82.5% of a community’s foundation budget guarantees that school districts serving wealthy communities receive some state Chapter 70 aid. Raising the cap helps ensure that the Chapter 70 aid increase resulting from the proposed lower total state target local contribution is directed toward communities that need the resources.
Second, the Committee should phase out the hold harmless provision that guarantees each school district receives at least as much state education aid as the prior year, regardless of the district’s enrollment or level of student need. In the FY 2021 budget proposal, the wealthiest school districts received approximately five times more state aid attributable to the hold harmless provision per student than the least wealthy. With S.355’s proposed reduction in the total state target local contribution, communities impacted by a hold-harmless phase-out will have additional local capacity to maintain or exceed current spending.
Finally, we urge the committee to phase out the annual per-student minimum aid increases because they do not account for student or community need and are regressive. In FY 2021, the state’s wealthiest districts received over six times more minimum aid per student compared to the lowest-resourced communities.
Closing achievement gaps and addressing unmet student need in the state’s lowest-resourced communities is a shared statewide priority. To meet this goal sooner, we urge the state to target the education aid it provides school districts more strategically and equitably.
Carolyn Ryan
Senior Vice President, Policy & Research
[email protected]617-557-7310
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