Report says $500 million in state education funding goes to most affluent communities

Business groups urge shifting aid from wealthier to poorer school districts

LESS THAN A year after Massachusetts enacted sweeping legislation to revamp its school funding formula to steer millions of dollars in new aid to low-income districts, a new report suggests the state should go even further in ensuring that support goes to the neediest districts.

Although the more than $5 billion of state funding to schools is largely directed to lower-income school districts, nearly $800 million is allocated without regard to need. A report released Monday by the Massachusetts Business Alliance for Education and Greater Boston Chamber of Commerce says the state should pull back on that funding and redeploy those dollars to low-income districts that continue to struggle to adequately fund schools..

“If ever there was a moment to promote equity in funding education, now is the time to do it,” said Ed Lambert, executive director of the business alliance. “For every dollar we send to communities that can afford to fund schools on their own we’re moving further, not closer, to equity.”

Lambert said uncertainties introduced by the pandemic about the state’s ability to meet its commitments to poorer districts under the funding measure passed last year make the case even more urgent for cutting the amount of aid distributed on a “need-blind” basis.

It is not clear, however, whether there will be much appetite on Beacon Hill for digging back in on the complicated school funding formula so soon after lawmakers reached an agreement on a contentious issue that took years to finally settle. 

The Student Opportunity Act, signed last November by Gov. Charlie Baker, commits the state to $1.5 billion in new annual aid to districts, ramped up over seven years. Most of the new spending, as with the existing pool of state education aid, will go to the neediest districts. But the new report is spotlighting the share of state aid — $788 million, or 14 percent, of the more than $5 billion proposed for the 2021 budget — that is allocated without regard to need.

The bulk of that money flows to districts through four elements of the state funding formula that was first developed as part of the 1993 Education Act. 

A “hold harmless” provision prevents any district from seeing its state aid reduced from one year to the next, regardless of decline in enrollment; an annual increase in aid per student is given to all districts across the board in years when the formula otherwise doesn’t generate a funding increase; and the formula guarantees that all districts, regardless of wealth, receive state aid equal to at least 17.5 percent of the district’s so-called “foundation budget,” the minimum spending level deemed necessary to provide an adequate education to all students. Those three elements, plus a provision that provides aid to cushion any sudden increase in local spending a community would otherwise be expected to make based on the state formula, total more than $700 million of the proposed $5.5 billion in state aid for 2021. 

The report says 64 percent of the “need-blind” state aid, or nearly $500 million, goes to the wealthiest 20 percent of districts in the state, communities that the two business organizations say could afford to fund schools on their own.

Many poorer communities are only able to fund schools at or close to the foundation budget level the state requires — about $14,000 per pupil. The report says in 2019 the wealthiest 20 percent of districts spent, on average, 53 percent more than the required foundation budget in 2019 by tapping local dollars to boost school spending. 

“Within a system we built and we designed, we reinforced inequities by having these categories of funding go to cities and towns that don’t really need it while others are struggling to educate and provide funding to those who really need it,” said Jim Rooney, president and CEO of the Greater Boston Chamber of Commerce. “Many of those are low-income black and brown communities, so this is what systemic inequality is.” 

The report does not recommend immediate elimination of all need-blind aid, but instead urges modest initial changes that would free up a total of about $25 million that could be made available for poorer districts. 

For example, while the current formula guarantees state aid equal to 17.5 percent of the so-called foundation budget, even to the state’s wealthiest communities, the report recommends that figure be reduced to 15 percent, with districts then responsible for 85 percent of foundation spending. That would reduce aid to wealthier districts by about $5.4 million, while increasing aid to the bottom 60 percent of districts by $11.8 million per year. The report also recommends a modest change that would free up $16 million now spent on the hold-harmless provision, which currently accounts for $319 million a year in aid to districts that have seen enrollment declines.

There is growing uncertainty over the state’s seven-year plan to ratchet up school spending to meet the goals outlined in the Student Opportunity Act signed by Baker last fall. Even then, questions were raised about the ability to fully fund the ambitious revamp of the school funding formula because lawmakers did not attach any new revenue stream to the measure. They were counting instead on continued robust economic growth to bring new money into state coffers, expectations now being upended by the pandemic, which is battering the state’s economy.

Legislative leaders and the administration have vowed to do all they can to protect school aid, agreeing in July to at least level-fund school aid for the 2021 budget year with adjustment for inflation.

Lambert and Rooney said the budget uncertainty strengthens the case for applying an even more progressive formula to the existing pool of money. But a key legislative leader cautioned against any expectation that lawmakers will be eager to jump back into the school funding debate. 

Rep. Alice Peisch, the House chairwoman of the Joint Committee on Education, said she doubts her colleagues will be inclined to revisit the funding issue so soon. “We just spent a year on chapter 70,” she said, referring to the state law laying out how schools are funded. “The appetite to come right back and make additional changes is probably pretty low, particularly in this environment when things are so uncertain.”

Funding of Massachusetts schools was conceived by the 1993 reform law as a state-local partnership. The state established a formula for providing millions of dollars in new aid to schools in exchange for districts agreeing to a new set of curriculum standards and statewide assessments to measure student achievement and hold districts accountable for progress. 

The bulk of the money goes to higher-need communities, but the formula ensures that all districts get at least some state aid to complement local spending. Many say that is critical to making sure all legislators have a stake in maintaining the state funding stream. 

“I understand the political process,” said Lambert, a former state representative who served on the education committee at the time the 1993 law was passed. But he said the continued inadequate funding of lower-income districts and the sudden uncertainty about meeting the funding promise of last year’s law justify new steps to reduce any state aid not given on a strict need-determined basis.   

Peisch said the 1993 law was termed a “grand bargain” because of the pairing of state aid with new accountability measures, and she worries that moving toward ending aid to better-off districts could generate a “backlash” against the accountability provisions of the reform law.

Peisch said the state would likely give priority to lower-income communities if any additional federal pandemic relief funding arrives for schools. She also emphasized that the new funding agreement reached last year included provisions calling for further study of the school aid formula. 

The law calls for a study of school finances challenges faced by rural districts that have been losing population — the communities that benefit from the current “hold harmless” provision of the funding law. It also directs the state education department and Department of Revenue to conduct a study of the provision ensuring a set share of state aid for foundation spending for even the wealthiest communities. 

“So we know this is an issue that needs to be looked at,” said Peisch. “But we just looked at it and I don’t think it’s going to be revisited soon.”

Meet the Author

Michael Jonas

Executive Editor, CommonWealth

About Michael Jonas

Michael Jonas has worked in journalism in Massachusetts since the early 1980s. Before joining the CommonWealth staff in early 2001, he was a contributing writer for the magazine for two years. His cover story in CommonWealth's Fall 1999 issue on Boston youth outreach workers was selected for a PASS (Prevention for a Safer Society) Award from the National Council on Crime and Delinquency.

Michael got his start in journalism at the Dorchester Community News, a community newspaper serving Boston's largest neighborhood, where he covered a range of urban issues. Since the late 1980s, he has been a regular contributor to the Boston Globe. For 15 years he wrote a weekly column on local politics for the Boston Sunday Globe's City Weekly section.

Michael has also worked in broadcast journalism. In 1989, he was a co-producer for "The AIDS Quarterly," a national PBS series produced by WGBH-TV in Boston, and in the early 1990s, he worked as a producer for "Our Times," a weekly magazine program on WHDH-TV (Ch. 7) in Boston.

Michael lives in Dorchester with his wife and their two daughters.

About Michael Jonas

Michael Jonas has worked in journalism in Massachusetts since the early 1980s. Before joining the CommonWealth staff in early 2001, he was a contributing writer for the magazine for two years. His cover story in CommonWealth's Fall 1999 issue on Boston youth outreach workers was selected for a PASS (Prevention for a Safer Society) Award from the National Council on Crime and Delinquency.

Michael got his start in journalism at the Dorchester Community News, a community newspaper serving Boston's largest neighborhood, where he covered a range of urban issues. Since the late 1980s, he has been a regular contributor to the Boston Globe. For 15 years he wrote a weekly column on local politics for the Boston Sunday Globe's City Weekly section.

Michael has also worked in broadcast journalism. In 1989, he was a co-producer for "The AIDS Quarterly," a national PBS series produced by WGBH-TV in Boston, and in the early 1990s, he worked as a producer for "Our Times," a weekly magazine program on WHDH-TV (Ch. 7) in Boston.

Michael lives in Dorchester with his wife and their two daughters.

Sen. Jason Lewis, the Senate co-chair of the education committee, is still reviewing the report from the business groups, his office said, but believes it will will help inform the analyses the state will carry out.