A pair of business groups are recommending in a new report that the state gradually phase out some elements of its school funding mechanism that are not based on student need.
The report, from the Massachusetts Business Alliance for Education and the Greater Boston Chamber of Commerce, finds that the current formula steers hundreds of millions of dollars to the wealthiest school districts. It lands less than a year after the passage of a sweeping school funding reform law and amid the economic disruption of the COVID-19 pandemic.
Ed Lambert, the executive director of the Massachusetts Business Alliance for Education, said the groups began their review before the COVID-19 crisis hit, dramatically changing both the state's budget picture and the dynamics of schooling.
The state has long used distribution formulas that deliver some aid to all communities. The report looked at the fiscal 2021 budget proposal Gov. Charlie Baker filed in January and found that of its $5.48 billion in Chapter 70 school aid, about $778 million, or 14 percent, is distributed due to factors that are not based on community wealth or income.
The report said those factors are "essentially needs-blind in that they do not account for a community's capacity to provide an adequate education" and many were "added to the formula during previous reforms to build political support by ensuring that nearly every community received more money than before."
While poorer districts receive the bulk of the funding formula's needs-based aid, the report found that 64 percent of every "needs-blind dollar," or almost $500 million, goes to the wealthiest 20 percent of school districts.
Lambert, a former state representative who previously served as mayor of Fall River, said the Chapter 70 school funding formula was originally crafted to help provide kids with equal educational opportunities and fill the gap between the cost of education and what a community can afford to pay.
"This non-needs based aid is different than that original intent," he said. "It was clearly and even very transparently designed to make sure that everybody gets something, but if it's not necessary, it doesn't become education aid; it becomes property tax relief for wealthy communities who have the ability, through their own property taxes to close that gap."
In their report, the alliance and the Greater Boston Chamber of Commerce recommend several steps they say would help ensure state education aid funding reaches the students who need it most.
They suggest phasing out the minimum aid funding increase for districts whose state aid would otherwise not go up, and the "hold harmless" provision that guarantees districts receive at least as much Chapter 70 money as the year before, even if their foundation budgets decrease.
A school district's foundation budget consists of both state aid and a local contribution. The report recommends increasing the maximum required local contribution for wealthy communities, and eliminating "below-effort aid" for municipalities that can fund 125 percent or more of their foundation budget from local contributions.
"An equitable economic recovery from the COVID-19 pandemic requires greater attention to how the state leverages and targets its limited resources," Greater Boston Chamber President and CEO James Rooney said in a statement. "Our priority rests with ensuring every student can access a quality education and that we continue to make headway toward closing achievement gaps. The economic future of these students and the state depend on it."
In 2015, a state commission that had been reviewing the school funding formula reported that its starting point, known as the foundation budget, underestimated the cost of education by $1 billion annually by inadequately accounting for costs associated with employee health care, special education and teaching low-income students and English learners.
It took lawmakers four years to agree on and pass legislation implementing changes the commission recommended, and authors of the final version of the bill touted the fact that it would benefit all school districts.
Baker signed the law, the Student Opportunity Act, in November 2019. It called for a new investment of $1.5 billion in K-12 public education over seven years, intended to start this year.
After weeks of business shutdowns, skyrocketing unemployment and widespread uncertainty this spring drove down expectations for revenue collections, the Baker administration in late July announced that local and school aid would be held at last years level's for fiscal 2021, plus federal dollars made available to help schools reopen and an additional $107 million in school aid to cover inflation and enrollment factors.
Meanwhile, schools are incurring new costs for pandemic-era expenses like remote learning technology and increased sanitation, although significant federal funds have been allocated to help with those costs.
State budget writers, continuing to await word from Washington on any additional federal support, have not produced a full spending plan for the fiscal year that began more than two months ago, and a temporary budget is in place to keep government running at least through October.
It's unlikely the Legislature would have the appetite to undertake another run at a school finance overhaul so soon after its last reform, but a tighter revenue outlook could spark conversations about how existing money is allocated.
"The state budgets in upcoming fiscal years will undoubtedly be among the most strained in the state's history, with budget writers stuck in the vise grip of enormous reductions in revenue and greater demand for public services," the report said. "Making the best use of the state's resources is an urgent necessity not only because of budget stress, but even more so because of the collective and imperative responsibility to close achievement and opportunity gaps."
Lambert said there can be a need for political compromises that allow everybody to get something when times are good, but that the COVID-19 pandemic has shined a spotlight on existing inequities and created a financial pressure that means now might be a time to pull back on aid to wealthy communities and redirect that money.
"I think the case is straightforward, that as legislators and others you oftentimes have to vote and support a policy that might not directly benefit your district but benefits the commonwealth, and that's exactly what needs to happen here," Lambert said.