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Torrisi
Answers Concners A group of concerned parents in North Andover wrote to state Representative David Torrisi concerning the financial situation intown and the state of the school system. Below is the letter Mr. Torrisi sent in response to those concerns. Dear Concerned parents of North Andover: Thank you for contacting my office regarding state aid to municipalities for fiscal year 2007. It is always a pleasure to hear from the constituents of my district. You and several of your neighbors have contacted me about an issue that is of critical importance to North Andover and that deserves much attention. Please take some time to digest this letter (it’s a mouthful), but you have asked me to comment on several different aspects of local aid. Chapter 70 Funding As you are aware, Governor Romney released his version of the state budget last month. The administration’s budget for fiscal year 2007 includes a proposal to reformulate Chapter 70 funding (direct school aid). While the statewide education aid account is increased by $163 million, this change translates into only a small increase for our town. Specifically, this new formula factors in both residential income, as well as property values, in determining the need for assistance from the state. In North Andover’s case, the Governor has determined that the Town is able to pay more than 88% of total costs to educate our children. We, as residents, know that this estimation is inaccurate. As you may remember, in fiscal year 2004, Chapter 70 funding took a large hit when overall state spending was drastically reduced due to the recession. North Andover was one of 187 communities that took a 20% cut to their Chapter 70 aid. Today, our state is experiencing a modest economic recovery as state revenues have reached their pre-recession levels. In this fiscal environment, I fully support increasing state money to our school districts and feel that the Governor’s proposed formula is not the best way to distribute this funding. As
we move forward with budget deliberations in the upcoming
months, please be assured that I remain committed to
reversing Additionally, I am a cosponsor of legislation which seeks to increase the amount of minimum state aid per pupil to $2,000 over the next three years. I understand that this proposal is ambitious, but I feel strongly that communities like ours need to see a significant increase in the state education aid that we receive this year and that the state must pick up more of the tab in a consistent, permanent manner. Special Education You and your neighbors have called upon me and my colleagues to provide state funds to cover 100% of special education expenses to municipalities. Before FY03, the state only paid 50% of the cost of private residential special education placements directly to the private special education school, while the balance was paid by the local sending school district. In response to this inadequate funding, a new program was established by the Legislature to provide additional state relief to communities, which would ultimately cover 75% of the excess costs beyond four times the state average foundation budget for all special education students. This has been commonly referred to as the special education “circuit breaker” program. In FY02, when the state paid only 50% of residential placement costs, this program was funded at $65.2 million. Two years later, the circuit breaker program went into effect and the Legislature increased this funding to $121.6 million, sharing in the costs of educating approximately 10,000 special education students in both residential and non-residential placements. This represented a 40% reimbursement rate for excess costs. In FY05, the Legislature increased this funding dramatically by $80 million. As a result, the state provided $201,600,262 for special education services, including an extra $3 million for unanticipated extraordinary costs. You should know that the state uses the previous year’s enrollment numbers for the purposes of calculating current fiscal year reimbursements. As a result of these increases in funding, North Andover has received much larger reimbursements for their special education costs. In FY04, North Andover had 51 special education students eligible for reimbursement under the circuit breaker program. This represented a total education cost, based on the Town’s claims, of $2,554,591. Of this amount, the state assumed $193,182 for students who were the responsibility of the Department of Social Services. In FY04, the circuit breaker “threshold”, which is four times the statewide average foundation budget per pupil, was $29,320. North Andover’s total threshold was calculated at $1,495,320 (51 students x $29,320). Costs beyond the threshold totaled $866,089 ($2,554,591 - $193,182 - $1,495,320). Thus, the state reimbursed North Andover $655,696, which was 75.7% of these excess costs, while the Town’s share of these excess costs was $210,393. For FY05, North Andover had 63 special education students eligible for reimbursement. Costs beyond the threshold totaled $992,991. The state paid $714,949 towards these educational expenses. As a point of reference, the total statewide special education claims for 11,929 students for FY06 was $633,267,944. The excess costs beyond the threshold totaled $238,353,205. The state spent a total of $201,625,262 on special education costs, of which $173,715,466 was reimbursed directly to cities and towns. State-Owned Land/PILOT (Payment in lieu of taxes) Many of you have also questioned why North Andover had a drop in its PILOT from state-owned land. The reason for this drop has to do with the valuation of the state-owned land itself, and does not reflect a change in the state’s formula for determining PILOT payments. The state-owned property in North Andover consists of Boxford State Forest, the Bureau of Solid Waste, and Harold Parker State Forest, which totals approximately 2,000 acres. State law requires the Department of Revenue to determine the fair cash value of this land every four years, using certified land schedules from the individual communities. Based on the information provided by the local assessor in 2004 regarding recent sales of comparable land in the Town, the value of this state-owned land was reduced to $21 million. This figure is a considerable reduction and will be used for the first time in the FY07 budget. The state currently provides a reimbursement rate of 62% of lost local taxes, based on the total land valuation. In FY07, this formula provides $160,522 to the Town of North Andover for state-owned land. Municipal Employee Health Insurance Several of you have noted that North Andover has witnessed a sharp increase in its payments for retired teacher health insurance. These additional costs are attributable to increases in the costs of insurance, as well as an increase in the number of teacher retirements. Further, while the expected municipal contribution to retired teacher health benefits has increased, so has the state’s contribution to these costs. In the Governor’s budget for FY07, the account which provides reimbursements to communities for retired teachers’ health insurance has increased by $9,204,786, for a total of $73,365,821. At the same time, the estimated state assessment to North Andover to cover a share of health insurance premiums for retired local teachers has increased by $476,108 to $1,742,948. This escalation in costs is due to the large number of teachers retiring from our Town in recent years. Between 2001 and 2005, there has been a dramatic increase in the Town’s retired teachers, growing from 80 to 140 individuals. Thirteen teachers retired this past year alone. The rise in the state assessment for retired teachers’ health insurance is also attributable to the increase in the number of retired teachers on the family health insurance plan. In 2001, there were 15 retired teachers on the family plan. In 2005, there were 46. The family plan, which includes married couples, is the most expensive. Coupled with annual premium increases based on higher costs for treatment and care, the additional expense to the Town is enormous. Residents of North Andover have called on the state to provide municipal government with the same financial flexibility that the state government exercises relative to establishing employee contribution rates for health coverage. On the state level, the Group Insurance Commission (“GIC”) oversees health care benefits for the majority of state employees, and contribution rates are set in the annual state budget. The Governor’s budget for FY07 would allow each municipality to establish their own local GIC and would provide municipal officials the opportunity to negotiate with individual unions separately in order to set different contribution rates for different groups of local employees. State Lottery Aid Further, many of you have called for the disbursement of all net proceeds from Lottery revenues to the cities and towns of the Commonwealth. As you are aware, lottery aid is money generated by revenues from the Massachusetts State Lottery that is returned to cities and towns as unrestricted funds for the general support of municipal government. There has been steady growth in Lottery revenues, but the amount returned to cities and towns has twice been “capped”, once in the early 1990s and again in 2002, in order to divert revenues to offset state budget line items. This cap, put in place for the FY03 budget due to the recession, limited the amount of lottery aid distributed to cities and towns to $778,091,951 of the total $889,490,000 in net Lottery profit. The Governor further reduced this payment to $705,340,354 through unilateral cuts. For FY 2004 and FY 2005, lottery aid was reduced to $661,378,162, though a $75 million one-time supplemental allocation in FY05 was released to bring funding up to $736 million. The statewide lottery distribution for FY06 is $761,378,162, which brings the distribution closer to the 2002 level. The cap on lottery distributions is currently scheduled to phase out by FY 2009, which was the year the Governor and Legislature estimated the state would again be operating at a surplus. There is a possibility that the cap could be phased out sooner. For FY05, cities and towns received 79% of net lottery profit as direct local aid. Much of the remaining lottery money also reached the communities of the Commonwealth indirectly, including support for local cultural councils and other community-based arts and humanities programs. Again, thank you for contacting me about these critical issues. I look forward to working with you in the future and hope we can find ways to resolve North Andover’s budgetary matters. Please do not hesitate to contact me should you have any questions or ideas on how we can make this happen.
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the deep cuts made to
education during the fiscal crisis and to ensuring that
our community receives a greater increase in local aid
from the state. To this end, I have contacted the
Chairman of the House Ways and Means Committee to urge
him to make this funding his top priority, as it is mine.