FY2002 State Budget – Governor Cellucci’s Proposal (House 1)

INTRODUCTION

Governor Cellucci recently released his 305 page FY2001 budget proposal (House 1). This is the first step in a long budget process. First, the bill goes to the House Ways and Means Committee. That committee will issue its own version of the budget probably by the end of April. After that, the budget will go to the House floor for debate and, then, to the Senate where the Senate Ways and Means committee will propose its own version. The Senate budget is usually debated in late May or early June. The Conference Committee reconciling the two versions usually issues its report by the end of June as the new fiscal year begins on July 1. However, in recent years, interim budgets had to be enacted because agreement on the main budget has taken weeks or even months longer.

Overall, the governor’s recommendations do not keep pace with the needs of K-12 education and represent, essentially, a level funded budget for higher education campuses. His budget requests are a natural outgrowth of his success in reducing the state income tax in last fall’s election. For FY2002, this means a $400 million reduction in state revenues. Additional reductions of similar amounts will take effect in FY2003 and FY2004 as well.

Of some comfort, however, is the fact that the governor has chosen not to include legislative recommendations that would eviscerate the public employee collective bargaining law. Last year, as you may recall, he incorporated several disastrous anti-collective bargaining features in his budget recommendations.

Finally, the governor is employing a number of fiscal “gimmicks” to balance the budget such as raiding the Tobacco Trust Fund and underfunding the State and Teacher Pension Liability Fund. (The latter will not reduce anyone’s pension entitlements but it does affect negatively our ability to make further retirement improvements.)

PreK-12 EDUCATION

School Aid
Chapter 70 school aid distributions (largely unrestricted aid) would be increased by $171 million. While sufficient to cover some inflationary costs and enrollment growth as required under current law, the amount is still deficient when it is realized what remains to be done under education reform. For example, in 41 school districts there would be no additional aid for FY2002. Overall, the budget, according to the Boston Globe, “appears to fall about $80 million short of projected local (education) needs . . . even with the increases proposed by Cellucci.” Senate president Thomas F. Birmingham added, "I think this is the wrong time to be shortchanging our kids".

Foundation Budget/Minimum Aid
The foundation budget is raised somewhat by adding a $30 per pupil technology component. Further, the governor links aid to above-foundation districts to changes in the foundation formula including enrollment changes, inflation as well as local property wealth and income. For example, the changed formula will provide additional aid to communities with high enrollment growth. As a consequence, the per-pupil component of minimum aid is reduced from $175 in FY2001 to $50 in FY2002 meaning there would be losers as well as winners with the proposed change.

Education Programs “Level Funded”
METCO Foundation Reserve

School to Work Alternative Education Grants

Early Literacy Programs Gifted and Talented Grants

Early Intervention Tutorial Literacy Pupil Transportation Reimbursements

Head Start Grants Class Size Reduction

School Lunch

Teacher Professional Development

School Breakfast

Education Programs: Increased Funding
Health Education (3.8%) Attracting Excellence to Teaching (41.7%)

MassEd. Net (38.1%) Desegregation School Construction (60.9%)

Chapter 70 Aid (5.8%) School Construction Annual Payments (19.7%)

Regional School Transportation (5.0%) Special Education: Residential Schools (5.3%)

Desegregation/Magnet Capital Pilot Program for Universal Feeding Projects (5.6%) (128.3%)

MCAS Low-Scoring Support (15%) Student Assessment (46.7%)

Education Programs: Decreased Funding
Early Childhood Grants (-.1%) Construction Planning Grants (-4.9%)

Kindergarten Development Grants State Wards (-100%) (-.2%)

After School Programs (-.9%) Special Education: Pooled Risk Program (-100%)

Safety/Overcrowding/Renovation Special Education Loan Pool (-100%)

Capital Projects (-.8%)

Schools for Abandoned Children Charter School Reimbursements to (-100%)

Local School Districts (-66.9%)

Non-Desegregation Construction (or $24.3 million less than last year) (25.8%)

NOTE: For exact figures, check MTA’s web page at www.massteacher.org.

Commonwealth Teaching Centers
The budget provides for grants administered by the Department of Education to establish two college (public or private) teaching centers to model the preparation of new teachers provided that each center establish a charter school to serve as a year round laboratory to instruct respective teachers. These charter schools would be in addition to those authorized aleady by current law.

Mentor Teacher Program
The Department of Education would be authorized to award up to $2.5 million to qualifying school districts for mentor teacher training programs including stipends and release time for mentor teachers.

Education Improvement Grants
Equal Education and Magnet Education programs have been eliminated with their FY2001 $13.2 million funding shifted into Education Improvement Grants. Perhaps Chapter 636 communities can apply for these grants, but the purposes (“parental outreach, school choice, and other educational improvement activities”) are not the same purposes to which Equal Education and Magnet Education have been devoted historically: elimination of racial imbalance.

General Local Aid
Additional assistance to cities and towns has been level-funded. However, lottery disbursements are projected to increase by $60 million.

PUBLIC HIGHER EDUCATION

The news for public higher education is not good. In the aggregate, institutional budgets are essentially level funded and, therefore, do not keep pace with inflation or institutional growth.

Community colleges and state college line items are increased by just 2.5% and 0.2% respectively. The allocation for the University of Massachusetts has been decreased by 2.1%

It should be noted that the Board of Higher Education (BHE) anticipates some $25.2 million will be reserved for supplemental appropriations to the FY2002 budget that would be requested upon ratification of outstanding contracts. Increases for settled collective bargaining agreements are included in the campus allocations. In brief, the BHE estimates that total “state support including anticipated supplemental funding for outstanding collective bargaining contracts would represent increases of approximately 1.1% for the University of Massachusetts, 3.8% for state colleges and 3.2% for community colleges.”

Unfortunately, too, employee health insurance premium shares are proposed to increase by two-thirds from 15% to 25% of total premiums.

As in the past, we need to lobby the legislature for increased appropriations. A summary follows while a detailed listing of campus line items comparing actual FY2001 allocations with the governor's FY2002 recommendations may be found on MTA’s web page at www.massteacher.org.

Segmental Operating Budgets (totals)
FY2001 FY2002 % Change
Allocations Recommendations

Community Colleges $243,802,380 $249,849,142 + 2.5%
State Colleges $194,877,594 $195,193,327 + .2%
University of Massachusetts $496,817,072 $486,350,637 - 2.1%

Health and Welfare Funds
FY2001 FY2002 % Change
Allocations Recommendations

Community and State Colleges $2,998,441 $3,182,263 +6.1%

Health Insurance
Premiums Employee health insurance premiums would be increased from 15% of the total premium to 25% amounting to a two-thirds increase over FY2001. For all state employees this amounts to a $50 million salary reduction.

Campus Performance Improvement Reserve
A FY2000 reserve ($2 million) “to improve academic programs, student performance, campus accountability etc.” was not included in House 1.

Endowment Incentive Program
Eliminated from the budget was a $10 million incentive reserve to encourage increased private donations to the University of Massachusetts endowment fund.

General Scholarship Fund
Scholarship allocations are reduced by $10 million or 8.9% when compared with FY2000 funding levels.

Tomorrow's Teacher Program
Allocations for scholarships for students who agree to teach for four years in the public school system are level funded at $2.9 million.

Education Reference Materials
The educational library reference materials budget is level-funded at $14 million.

RETIREES

COLAs
COLAs for retired public employees are no longer a part of the state's operating budget. Costs for all COLAs (set at 3% of the first $12,000 of retirement income) will be assumed by the appropriate employee pension systems. For teachers and state employees authorization of this payment must be approved by the legislature. Unlike last year, the governor's budget proposal includes an authorization recommendation.

Health Insurance Premiums
While group health insurance premiums are proposed to be increased for active state employees from 15% to 25%, the governor's budget does not change the premium percentage shares for either retired state employees (10% if retired prior to July 1, 1994; 15% if retired after June 30, 1994) or retired teachers from some 74 local systems that participate in the Retired Municipal Teachers Plan administered by the Massachusetts Group Insurance commission where the retiree premium share remains at 10%.

MISCELLANEOUS

Pensions Liability Reserve
The Pension Liability Fund for teachers and state employees has been underfunded by $116 million. The governor’s FY2002 recommendation is $87 million (8.5%) less than what was appropriated in FY2001 and $116 million (11%) less then what the amortization schedule to eliminate the liability requires. State Treasurer Shannon O’Brien was very direct in her criticism of the governor's proposal. “We should not balance the budget by raiding the pension fund and other off-budget accounts (e.g. tobacco trust fund), by pushing more items onto our credit card, or by robbing costs off on cities and towns,” she said. (Boston Globe, January 25, 2001)

CONCLUSION

It is not too soon for local association and education activists to contact their state legislators to remedy the obvious shortcomings in the governor's proposed budget. As in the past, the governor's budget will change as it advances in the legislative process. MTA lobbyists will be working with the state's budget writers for the next three months to ensure that the few "good" aspects of Governor Cellucci's budget proposals are retained, the "bad" aspects discarded, and key line item appropriations are increased. Further updates and recommendations for lobbying can be expected as the legislative session unfolds.

2/05/01