1. LOCAL AID What’s in House 1: Reductions with Reform March 4, 2003

2. Local Aid Components FY03FY04FY05 Chapter 70, SBAB, SPED, transportation, class size, other education aid Lottery PILOT (5% funded)PILOT (80% funded)PILOT (100% funded) Additional AssistanceTransitional MitigationTransitional Mitigation (multi-year phase-out), Housing Incentives Quinn, libraries, other BOLD = Section 3

3. Local Aid Components All Local Aid FY03 vs. FY04 (millions) * PILOT not Section 3 in FY03; included for comparison only

4. Education Aid

5. Other Programs All other local aid programs account for $226M, 4.5% of FY04 total local aid

6. Local Aid Principles Education is first priority 100% of foundation for all school districts Assist districts without sufficient tax base New incentives, increased SPED funding Formula-driven fairness PILOT (Payment In Lieu Of Taxes) Updates with current data Cut paperwork (no grant applications) Smooth transition

7. Local Aid Principles Why not across the board? Hits hardest those who depend most on state aid Violates foundation budget commitment to education Perpetuates past inequities

8. Understanding Chapter 70  Average cost per student (the foundation)  Sharing the cost a)City or town b)State

9. Average per student cost Base cost per student up 3.3%: FY03=$5,325 FY04 H1=$5,500 Adjusted for 50% increase for low-income 33% increase for English immersion 33% credit for additional charter students (before tuition deduction), 3-year phase-out 70% increase for vocational school students 8.25% SPED factor (before additional SPED reimbursements) Average foundation FY03 $7,184 versus FY04 $7,391

10. Sharing the cost: local Since 1993, based on prior year local contribution, adjusted for growth in municipal revenues (MRGF). MRGF is still the starting point H1 factors in adjustments for FY04 state aid reductions.

11. Sharing the cost: local NEW H1 compares local school spending to the property tax base, adjusted for local median income New adjustment prescribes a minimum effort on education: $6.00 of tax rate If local spending exceeds $6.00, then local contribution lowered If local spending less than $6.00, then local contribution raised

12. Sharing the cost: examples

13. Sharing the cost: state Foundation cost per student less local contribution = state share State pays minimum 12% of the foundation No locality responsible for more than 88%

14. Logic of Chapter 70 reform Equalized required contributions provides more aid to communities funding more than average share Eliminates unfairness caused by old 1993 as base year data Establishes flexible, common standard of effort not based on historic distributions Establishes single factor ($6.00 tax rate) to calculate share of education spending To learn more about Chapter 70 changes, and to see the calculations used to determine Chapter 70 aid for your city or town, go to http://finance1.doe.mass.edu/chapter70/chapter_04p.html http://finance1.doe.mass.edu/chapter70/chapter_04p.html

15. Regional district reform FY03: regional district aid had little connection to enrollment or foundation FY04 REFORM: Foundation budget fully-funded at local level for all students, including regionals Municipality transfers foundation budget amount per student to regional school district, based on enrollment

16. Education aid summary

17. Major reductions Lottery reduced by 34% from FY03 Additional assistance eliminated

18. PILOT (Payment In Lieu Of Taxes) FY03: Based on value of state land only; $10m, not fully funded FY04: Based on value of all state property (excluding Higher Education, authorities, and hospitals), $173m, 80% funded Tax value = square-footage x property tax rate FY05: 100% funded

19. Housing Incentives To be fully implemented in FY05 Based on number of occupancy certificates issued in FY04 Includes all types of housing units Includes rehabs and new starts $50M allocated; approximately $3,000/permit based on FY02 construction rate

20. Transitional Mitigation Established to offset impact of reform Will be phased out while PILOT and Housing Incentive program are fully phased in Distribution designed to ensure: No town cut over 10.5% of Section 3 state aid No town increase in state aid, except to reach foundation funding for education

21. Examples of changes Fall River Section 3 comparison (thousands) *FY03 Chapter 70 figure includes estimate for Fall River’s share of regional Chapter 70 distribution. Fall River’s local contribution requirement for education will also be lowered by $1.4 million as a result of FY04 House 1 changes, helping to offset reductions in non-education state aid.