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Massachusetts Needs Major K-12 Funding Changes, Group Argues

Two decades after Massachusetts passed a fundamental overhaul of the way the state and districts paid for public schools, a new report is examining how the system has played out and advocating for significant changes to the way K-12 is financed.

The state's Education Reform Act, passed in 1993, now needs reform itself, according to a report from the Massachusetts Budget and Policy Center released on June 18, "Ed Reform at Twenty." This landmark law created the basic structure for K-12 funding in the Bay State, including a "foundation" amount per pupil required for so-called adequate education, a required local contribution, state aid to fill in any gap between the "foundation" level, and then any additional per-pupil funding local districts wish to provide.

As you can see from the recent funding levels in a relatively wealthy district (Newton) compared to relatively poor district (Lynn), however, there are big gaps that have developed over time in terms of what districts can provide, how much they choose to provide, and how much state aid is given from district to district. The formula needs to be broadly updated after two decades to account for new needs and costs, the center said.

Here's how the system works now [CORRECTION: Previously I indicated that these points were how the center wanted to change the system]:

• Creates a minimum required funding level for all districts. A district's minimum requirement is driven by its "foundation budget," calculated by considering the specific needs of its student population (e.g. the number of low-income students).

• Requires communities to contribute revenue based on their local tax-raising capacity.

• Provides enough state aid to fill the gap between a district's foundation budget and its local tax-raising capacity.

You can also see from the report that from 1993 to 2001, K-12 funding from the state nearly doubled, increasing from about $2.5 billion annually to close to $5 billion, but since 2002, annual funding levels have drooped by $600 million. Increased costs tied to special education and employee health care, the group states, have led to $2.1 billion in annual costs as of fiscal 2010 not anticipated in the state's funding structure. Cuts to the state income and capital gains tax rates about 15 years ago have also deprived the state of about $3 billion in annual revenue that, if recaptured, could be used for public schools, the center says.

"In many states, there were reckless tax cuts that made it impossible to maintain spending on education. Thus the economy weakened. In Massachusetts, this has been a long-term story," Noah Berger, the center's president, told me.

As Stateline writer Elaine S. Povich documented yesterday, lawmakers in 35 states debated tax changes during this year's legislative sessions, and there are a variety of approaches. Some states like Indiana and Oklahoma have cut taxes, while Virginia raised some rates. In all, 15 states debated changes to income tax rates.

Massachusetts has received relatively good rankings from the New Jersey-based Education Law Center, which advocates for higher funding levels and greater funding parity for low-income and high-needs students. But now that the broader economy is continuing its recovery, the time is right to increase Massachusetts' commitment to K-12, the Budget and Policy Center is arguing. Of course, some would contend that one way to create new basic K-12 revenue would be to reduce those employee health care costs, but the center believes that move would hurt the state's competitiveness in attracting new teachers.

A version of the budget passed by the state Senate would create a new panel to re-examine the Education Reform Act and see what, if any, revisions to its funding formula are necessary. It's unclear if that panel will be created (the House budget doesn't contain this provision) and, if so, when it would complete its work and make recommendations.

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