Sue Flicop

This was part of a regularly scheduled School Committee meeting. The budget discussions were split in two segments: first the Mayor gave a revenue update, and later the School Committee spoke with Ruth Balser about the federal stimulus money.

First the Mayor’s update: The $1 million FY08 turnback money (money that the School Committee had “leftover” at the end of that year due lower-than-predicted expenses) is expected to be returned to the school system for FY10. This is not 100% positive, though, and it would be considered “one-time” money, meaning that there will not be an extra $1 million in the following years. There is a process that the Mayor needs to go through before the money is guaranteed. Specifically, after July 1, he can request that the money be returned to NPS; then the Board of Aldermen will need to vote in favor of the return.

About money from the state, the Mayor was still uncertain as to how much to expect. Any additional funding would be split 70/30, with the school system receiving 70% of the new income.

The state legislature is once again looking at elements of the Municipal Partnership Act, which includes several ideas for increased taxes that would then give more money to cities and towns. First is the telecommunications tax, which would tax telecommunications companies on telephone poles, wires, and switching equipment. Currently, Newton does tax for the poles and wires, but is engaged in a lawsuit with the telecommunications companies over this. Therefore this money has not been available in the general fund. If the new tax were allowed, this money (about $5 million) might be released. Annual income from this tax is approximately $1.4 million. Additional income from taxing the switching equipment would increase this amount. The passage of this tax is uncertain.

Second is an increase in the state meals and hotel tax. This would mean approximately $830,000 to Newton if the state raised the overall tax and then used the lottery formula to divide up the money among communities. The legislature would need to approve this. Another possible method would be to allow cities and towns to charge a meals or hotel tax on their own. This would result in $1.9 million extra for Newton. Again, the legislature would need to approve the measure, but then the Board of Aldermen would need to as well.

Regarding the GIC (the state employees health insurance program), the state legislature is considering making it easier for cities and towns to join this program, which could save money. Currently, 70% of the unions in a community need to approve this shift to the GIC. This restriction could either be removed or lowered. An alternative is to allow cities and towns control over their own plan, similar to the state. This would mean that Newton could determine elements of the employee health care plan (e.g. co-payments) without it being part of collective bargaining. The savings to Newton is unclear at this time.

The federal government is increasing money through the IDEA grant, which is focused on special education. The Newton amount is $1.7 million in the first year, and is expected to be (but not 100% sure) a recurring grant through FY11. How this money can be spent is unclear at the moment. Staff from NPS will be attending workshops on how to apply for the grant money and how it can be used. More info should be available in a couple of weeks.

Second, the conversation with Ruth Balser: The Federal government has given Massachusetts $820 million for two years to apply to K-12 and higher education. An additional $250 million will be coming to the state over two years for special education, and an extra $160 million for two years for Title 1 funding.

When the governor created his budget, he level-funded Chapter 70 funds, which go to cities and towns specifically for education. He also assumed passage of some elements of the Municipal Partnership Act, which meant assuming that cities and towns would have additional income. Finally, the Governor changed the formula used to divide up the money among communities. Since the foundation amount (the amount that it takes to educate a child—calculated by the state) increases each year, this offset any revenue increases, and meant that many communities would not be able to reach this foundation amount in their own budgets. Newton, though, is at 101% of the foundation amount using these calculations.

Ultimately, the Governor was $168 million short in the state’s ability to help all Massachusetts communities to reach a minimum foundation level. Therefore, the first part of the federal money to be disbursed is intended to make all the cities and towns reach this level. This is why Newton did not receive any of the initial funding.

It is unclear how much of the remaining money will come to Newton. The legislature has yet to present its own budget, which might use a different formula than the Governor’s. Under a 5-year reform plan (this is year 3), Newton was due to get an extra $2 million this year in Chapter 70 funds. Given state finances, it is possible that this plan will be frozen until the economic environment improves. Rep. Balser feels that, given the economy, the legislature will vote for some sort of funding increase, although she is not sure which one.

As a result of these discussions and uncertainties, the School Committee agreed to hold off on voting on the FY10 budget a few weeks in the hopes that the division and requirements of federal stimulus spending will become clear. Thursday’s budget meeting is now cancelled, with an interim meeting to be scheduled before a final budget vote on April 13th.