2 Big Reasons MA Schools Face a Budget Crunch

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Across the state, school districts are dealing with budget deficits and funding shortfalls due to the expiration of pandemic-era assistance programs and decreased state aid to public schools. Many cities and towns are scampering to bridge the financial gaps through budget cuts or Proposition 2 ½ overrides. 

How did things get so bad? Though it may seem that the bottom has suddenly fallen out of every public school district’s budget, this problem has been simmering for some time and can be traced back to two specific factors. One is a cap on inflation adjustments to education budgets under the state Chapter 70 program, which is the primary source of state funding for public K-12 schools. The other is the 2020 Covid-19 pandemic.

Chapter 70 and the Student Opportunity Act

Massachusetts’ efforts to modernize its public school funding formula contained in M.G.L. Part I, Title VII, Chapter 70 resulted in the Student Opportunity Act (SOA), passed in 2019 after years of legislative discussion and debate. The SOA was meant to eliminate inequitable funding between wealthy and low-income districts. Over seven years, $1.4 billion would be dispersed to public schools in pursuit of that objective.

While some disadvantaged communities found relief through the SOA funding model, early data showed problems attaining the law’s goal of eliminating funding disparities statewide. In 2020, a joint study by the MA Business Alliance for Education and the Greater Boston Chamber of Commerce showed that Chapter 70 aid for FY 2021 was not evenly distributed, with many wealthier districts getting disproportionately more than low-income areas. 

Another problem concerns the recent rate of pandemic-induced inflation that has eroded funding under the SOA model. Whereas state law allows for increases tied to inflation, it caps the rate of inflation at 4.5% (see “Foundation Inflation Index”). As this recent analysis by the Massachusetts Budget and Policy Center shows, inflation over the past two fiscal years has hovered between 7% and 8%. The analysis estimates that the FY 2025 state budget needs $465M to close the funding gap. The budget currently awaiting the governor’s signature comes up short as it includes an additional $317M in Chapter 70 funding.

 Special Funding helped Schools Weather the Pandemic

For the past few years, federal pandemic relief dollars flowed to states and their communities, including Massachusetts. Public schools and other Local Education Agencies (LEAs) such as charter and virtual schools received assistance through several federal/state agencies and programs, such as:

1. Federal Emergency Management agency

1. 5/18/23: $5.2M for Covid test kits;

2. 1/31/24: $64M for Covid School Testing;

3. 2/13/24: $13.5M for Covid School Testing;

2. Elementary and Secondary School Emergency Relief I, II, and III Funds (ESSER I, II, and III);

3. Remote Learning Technology Essentials Grants (RLTE) that supported remote learning;

4. School Reopening Grants (SRG).

It's important to note that not all school districts and Local Education Agencies (LEAs) received equal amounts of Elementary and Secondary School Emergency Relief (ESSER) funds. This is because the funds were intended to provide greater support to low-income districts. Data available on the state website indicates that some school districts received no ESSER fund allocations for one or more of the three dispersals. 

Additionally, certain districts still need to claim their total funding allotments and have until this September to commit the allocated funds for ESSER III, or risk losing the money. Committed funds may be spent through December 2024 or, if an extension is granted, through March 2026.

Panic Sets in as Temporary Funding Ends

In early 2023, experts began predicting a "funding cliff" for state school districts–a crisis related to the expiration of temporary funding sources meant to assist schools with pandemic-related expenses. 

For many school districts, the crisis has arrived. Schools that created new programs and staff positions funded with ESSER money must find new funding sources or terminate programs and lay off staff. 

Of course, districts were aware that ESSER funding was temporary, so its expiration should come as no surprise to anyone. In some cases, the use of temporary funds for ongoing expenses is a major contributor to the current crisis, as highlighted by a recent Western MA News article comparing Northampton and Holyoke public school districts.

Northampton faced a $4.77M shortfall in its public school budget, a problem explained on the city’s website by Northampton Mayor Gina Louise Sciarra: “The deficit has grown in recent years because recurring expenses were covered with non-recurring revenues. Federal pandemic relief has been spent.” 

The article’s authors contacted the Northampton School Committee’s vice chair who confirmed the Mayor’s description of the district’s budget dilemma. She also acknowledged that the district knew not to fund permanent positions with temporary money, but felt they needed to do so. 

The authors’ conversation with the Holyoke Superintendent of Schools yielded a different view. The district is not in crisis since it did not create new, permanent positions that could not be supported once the temporary funding ended. The Superintendent also noted that SOA money helped Holyoke maintain temporary ESSER positions until that funding ends. He expects that only those temporary jobs will be cut once the funding runs out.

When comparing the demographics, we see that Holyoke, with a population of 38,238, has a much lower median household income of $49,007 compared to Northampton, with a population of 29,571, and an income of $80,981. When checking the ESSER data page, we find that Holyoke's total allocation of funds was $57,919,513, significantly higher than Northampton's  $5,229,522. 

Despite receiving a large cash infusion, Holyoke avoided becoming dependent on temporary funding and averted a budget crisis through careful planning.

As for Chapter 70, the law must be amended to adjust for inflation. As taxpayers and citizens, we have a right to expect the state to contribute its fair share to our public schools. If you agree, let your legislators know!