| New Methodology for funding School System considered by Ashburnham
By Jay Shenk
This may seem like a boring topic, but it isn’t—there is a lot of tax money and the future health of our school system involved, and the idea of changing how our towns are allocated their portion of the School District’s budget is causing controversy.
On June 18, 1993, the Massachusetts Education Reform Act was signed into law, which included such well known initiatives as charter schools and MCAS exams. The primary goal of this legislation was to “level the playing field”, in terms of the education available to all students across the state—the law was meant to insure that a minimum level of money was spent per pupil in all towns, regardless of the wealth of the school’s town or district. Since this ‘leveling’ was intended to bring poorer school districts closer to the level of the wealthier school districts, rather than the reverse, state “Foundation Aid” was established, or as it is better known, Chapter 70 funding.
The way the law works is that the Department of Elementary and Secondary Education (DESE) tells the towns or school districts what minimum amount of money must be spent on public education. This state mandated amount of funding is known as the “Foundation Budget”, which is typically the major portion of a school system’s budget. Then, using a formula, the state determines how much the towns must pay towards this budget, and Chapter 70 funding makes up the difference (in the Foundation Budget only). The breakdown of our AWRSD proposed 2011 budget (covers from July 2010 to June 2011) illustrates the concept:
As can be seen, Chapter 70 funds cover just about 50% of the Foundation Budget. Here in the Ashburnham Westminster Regional School District we also spend about $3.2 MM above the minimum required by law, to insure a higher level of education for our students. Other major expenses include debt service and transportation. Transportation actually consists of two parts. To encourage regionalization of school systems, the state pays 55% of the cost of school busing to regional school systems. However, they do not reimburse for any busing or transportation required for special needs children. For us, this means that we are reimbursed 55% of $1,265,000, or about $700,000.
A few notes on the state of educational funding during the current budget crisis: Our reimbursement for regional transportation was eliminated in a round of budget cuts, but then restored. Chapter 70 funding was also in jeopardy, but was paid nearly in full. It was only cut 2% thanks to federal stimulus money--The State of Massachusetts used $412MM of federal stimulus money in fiscal 09 and $168MM is being used this school year to fund Chapter 70 school aid.
Now here’s where it gets interesting…..
Chapter 70 funds are distributed to towns based on their need on something like the “Robin Hood” model, which is currently determined by the Department of Elementary and Secondary Education using what’s called the ‘aggregated wealth model’. This ‘aggregated wealth model’, which determines the level of Chapter 70 funding a town will receive, went into effect for the fiscal 2007-08 budget cycle, but it is being phased in slowly to avoid too large a shock to the system, as it has the potential to radically change how costs of a regional school system are apportioned between towns. The basic concept is that the more ability a town has to pay for its Foundation Budget, the less Chapter 70 money it will receive.
Use of this model was the first major revision to how Chapter 70 funds were distributed since 1993. Sort of like our progressive income tax system, the goal of the 'aggregate wealth model' is to determine the contribution of towns to their school systems based on their ability to pay. Quoting from the state’s website, “the new formula adopts the new 'aggregate wealth model' for determining required local contribution targets, with property values and personal income levels given equal weight.”
Apparently prior to the state adopting this 'aggregate wealth model' formula, property values and income weren’t given equal weight, or something like that, because the amount that should be paid by each town, if we had already adopted the state’s model for allocating school costs, has shifted over the past few years. As this AWM has been phased in, Ashburnham’s share has been decreasing and Westminster’s increasing, a trend that is very likely to continue and become more dramatic as the phase-in continues. The effect on each town’s contribution is illustrated below, were the district to go to this AWM allocation:
You can see the trend clearly, as well as that in the very first year of phase-in this new methodology would have actually benefited Westminster.
The kicker in all this is that although the Ashburnham Westminster Regional School District currently does not use the 'aggregate wealth model' to apportion costs to support the school system, but rather does it on a per student basis, called the “district model”; if one town wishes to move to the 'aggregate wealth model', by law the district must do so. Ashburnham is seriously considering moving to this model for the 2012 fiscal year (school year 2011 to 2012). Although Ashburnham has agreed not to do so in the 2011 fiscal year, here is the effect that such a change in allocation methodology would have caused:
This isn't trivial--Ashburnham has agreed to pay over $300,000 more in the coming school year than they are legally obligated to pay.
This discrepancy in the portions paid by each town will almost undoubtedly continue to grow, as the AWM phases in, and the effect might very well be worsened if state revenues do not improve, which could lead to lower Chapter 70 funding overall, increasing both town’s contribution.
As might be expected, both Ashburnham and Westminster view the possibility of moving to the 'aggregate wealth model' from the 'district model' quite differently. On the most superficial and unfortunately perhaps most important level, this change will save Ashburnham money but cost Westminster money, and the amount of money in question is substantial and will grow.
From Ashburnham’s point of view, there are good reasons for moving to the AWM besides just saving the cash. Perhaps the major reason is that the Chapter 70 Aid received by the school district is in fact already distributed using the AWM methodology, but simply shows up as a lump sum since we are a regional school district. Thought of another way, if Ashburnham and Westminster didn’t share a school district, Ashburnham would get more state aid per student than Westminster anyway, with the amount exactly equal to the change in apportionment that would occur by moving to the AWM for the district. Put another way, if the Chapter 70 funds came to the district split by town rather than as a lump sum, Ashburnham would have more state funds per pupil to put towards their portion of the school budget, and yet again the effect would be the same as moving to the AWM method of apportioning costs.
Another valid concern for Ashburnham is that while Westminster is not at their “levy limit”, Ashburnham is so close they can barely spend anything without going for an override, making supporting the schools or anything else that requires much spending very hard to accomplish. As an example, Ashburnham often has to break their budget into two parts—the part that can be funded within the levy limit, and the part which needs an override. Westminster, on the other hand, has about a $960,000 ‘cushion’, which is why we can vote for things that are fairly expensive at town meeting, and no override is required.
Some people in Westminster have a decidedly different view of going to the AWM for supporting the schools. Beyond just the money, it raises the question of just how much Westminster is benefitting from a combined school district with Ashburnham, which under this new methodology will probably always pay less per pupil than Westminster because they don’t have the tax base and access to route 2 we have in Westminster. There are many obvious and very important benefits to being in a larger district—sharing costs and more student opportunities being the major factors, but there are also additional costs as well, and this will add one more to consider.
It also seems like much of the negative reaction in Westminster is a feeling by some that we had a deal that was nice and simple, set up when the district was set up back in 1957, and now Ashburnham is taking advantage of a state law change to stick Westminster with a larger share of school expenses. Prior to the state's statutory mechanism including the AWM in 2007, Westminster would have benefited from the district switching to the statutory method, but Westminster did not push to do so, for reasons that can only be speculated, but probably a sense of fairness--it certainly doesn't make sense that Ashburnham would have to pay more per pupil that Westminster.
This entire situation is exacerbated by the financial plight of the school district regardless of what methodology is adopted to split the costs between the towns. Last year the school district spent down about $500,000 from their Excess and Deficiency Fund (E&D), plus they are budgeting for a 4.4% increase in expenses, driven in large part by special education, fuel, contracts, and more, as well as a $500K loss in revenue from not using the E&D fund. Voters in both towns will be asked to increase funding to the school district, and this could require an override attempt in Ashburnham and even perhaps in Westminster. We also have to worry about whether state funding for either Chapter 70 or Transportation will be cut.
In 2010, the phase-in of the AWM was slowed by the state because of the effect it was having on school budgets, but it can be expected to continue. A reason for the phase-in, and for slowing it down, is that in a town like Westminster, as an example, the new method can actually reduce total funding to the schools. Westminster is being asked to increase spending just to cover increasing district costs, and then asked again to raise spending to cover the new allocation method. If the full increase isn’t agreed to, the money to the school will decrease because although Westminster is required by law to fund the Foundation Budget, it isn’t required to fund the discretionary piece (which would still be allocated on a per pupil basis), so the overall spending per student would decrease in this scenario. In fact, the effect on the school budgets would actually be greater than just what Westminster didn’t pay into the discretionary spending account, as Ashburnham would then owe less money as well. It’s not a good scenario.
The Ashburnham Advisory Board recommended unanimously that Ashburnham stay with the district methodology through fiscal 2011, and that is what will happen, but the question now is what will happen in 2012, when there is a very good chance Ashburnham will elect to go the 'aggregate wealth model' route. The Selectmen of both towns, as well as the school committee, are working to resolve this 'bilaterally', and it seems that the allocation methodology has been discussed now for 4-5 years, although it is just coming to the public's attention. At a recent meeting on this topic, John Fairbanks made a suggestion that an 'implementation team' be formed, after this budget season, to explore how to implement the AWM allocation methodogy fairly and in a reasaonable time frame.
This is a tough situation since both towns have valid arguments and some conflicting goals, mainly money. However, both towns have more goals in common that in conflict—we need to do what’s right for our towns, our taxpayers, and our students. We can blame the state (which I certainly do, but I blame them for everything) and the economy, but it’s still our problem to resolve.
| |