FY 2022 Budget Development and School Funding Updates

Considerations for FY 2022 Budget Development Maine School Superintendents Association 27thAnnual Winter Convocation January 15, 2021 1

FY 2022 Governors Budget for GPA Preliminary ED 279 Estimate Only Preliminary ED 279100% EPS Total Operating per 20-A MRSA 15683 $1,506,633,588 Total Other Subsidizable per 20-A MRSA 15681-A $575,975,183 Total Operating & Other Subsidizable $2,082,608,771 Total Debt Service Allocation $103,528,810 Total Normalized Cost of Teacher Retirement $48,878,211 Total Adjustments to Subsidy (excludes Min. Adjs.) $9,550,629 Total Enhancing Student Performance & Opportunity $60,993,648 Total Targeted Education Funds $79,983,493 Total Cost of Funding Public Education from Kindergarten to Grade 12 for 2020-21 $2,385,685,974 Total Estimated State Contribution $1,236,415,357 Total Estimated Local Contribution 7.90 mills $1,149,270,617 2

Comparison FY 2021-22 to FY 2020-2021 ED 279 Category Preliminary FY 22 Enacted FY 21 Total Operating per 20-A MRSA 15683 $1,506,633,588 $1,507,865,971 Total Other Subsidizable per 20-A MRSA 15681-A $575,975,183 $554,973,541 Total Operating & Other Subsidizable $2,082,608,771 $2,062,839,512 Total Debt Service Allocation $103,528,810 $103,428,195 Total Normalized Cost of Teacher Retirement $48,878,211 $50,697,332 Total Adjustments to Subsidy (excludes Min. Adjs.) $9,693,041 $11,306,920 Total Enhancing Student Performance & Opportunity $60,993,648 $60,374,775 Total Targeted Education Funds $79,983,493 $80,708,708 Total Cost of Funding Public Education from Kindergarten to Grade 12 $2,385,685,974 $2,369,355,442 Total State Contribution(includes casino revenue) $1,236,415,357 $1,226,852,247 Total Local Contribution Mill Expectation $1,149,270,617 7.90 $1,142,503,195 8.18 3

FY 2022 Updates to the School Funding Formula Proposed one year revision to the teacher salary matrix for grades 1-5, adjusting the ratio down, from 17:1 to 16:1. As the majority of the pupil decline from October 1, 2019 to October 1,2020 is in these grades, this adjustment takes into account the need to preserve staff in the face of the temporary declining enrollment, as a result of COVID-19. This adjustment also helps to boost the per pupil rate to offset the decline in pupils. Year two of three year plan to transition CTE Funding to the EPS model. Continued progress toward minimum teacher salary of $40,000 by including funds for SAUs with staff qualifying per 20-A 13407. Casino revenue available to support GPA projected to decline $9 million from FY 2021 enacted budget. 4

Statutory Impacts to FY 2022 school budgets Statute requires a minimum teacher salary of $37,500 for school year 2022. The state adjustment will be calculated based on October 1, 2020 data and will only adjust between $35,000 and $37,500 regardless if any teacher is reported to be earning less than $35,000. No proposed changes to per pupil amount for members of Education Service Centers; allocation remains at $94 per pupil, adjusted for state and local shares. Percentage of increase for CTE schools underspending the EPS the model is raised from 15% to 30%; reduced transition adjustment for schools overspending the model from 100% to 66%. 5

Statutory Impacts to FY 2022 school budgets, continued State valuation increase of 4% Pupil count decline -3% for subsidizable pupils These two factors, if present in your SAU, represent more ability to pay in the distribution formula, which may result in a lower state share, depending on your SAU s relationship to the state average. State average increase to per pupil valuation of 7%. Valuation and student counts used in FY 2022 subsidy distribution may be found here: https://www.maine.gov/doe/funding/gpa/eps/21-22 6

Be mindful of other factors impacting school budgets Local valuation changes while state valuation lags in reflecting market trends, local valuation can reflect a recent rise in home sales or loss of commercial property. Changes in total number of students, changes in student type (disadvantaged, ELL, PK, IEP identified). Declining interest on state approved construction debt results in less subsidy due to a smaller approved payment. Conversely, if you have a new construction project that hasn t bonded yet, remember to include principal and interest in your budget. Changes in base year spending on other subsidizable costs (Special Education, GT, Transportation, CTE) and changes in out of district placements. Changes in staff positions that are part of the salary matrix replacing experienced/advanced degree staff with staff at a lower step/lower degree will allocate fewer funds towards the per pupil rate. Data Quality it s important that your data submissions are timely, accurate, and complete. The preliminary ED 279 should not be used as a method to correct your data as, unless another SAU identifies an error that frees up funds, we have limited ability to make data corrections once the ED 279s are produced. 7

Other factors impacting budgets: Federal funds When budgeting Federal funds, try to use the funds on goods and services that do not have a direct link to the EPS model. Other subsidizable costs and CTE allocations may be adversely impacted by reduced general fund expenditures. Consider one time expenditures for Federal funds that will benefit your schools in the long term but won t create an ongoing fiscal obligation to be filled with general fund dollars, once Federal aid ends. 8

Other considerations Fund balance utilize in a consistent manner to buffer subsidy loss and maintain stability in the local share. Understand the 3% statute any fund balance in excess of 3% of the prior fiscal year s budget must be allocated by the school board over three years. Allocated means used to support a subsequent budget or voted into a reserve fund. Is your SAU a member of an Education Service Center? Utilize the services to the fullest extent to save money in the service areas and make it available to support other needs. You might even consider expanding services to create greater efficiencies and savings. 9

When will I see my FY 2022 ED 279? Preliminary ED 279s for FY 2022 are scheduled to be posted the week of January 25, 2021. Availability will be announced via a Priority Notice. Please compare the preliminary ED 279 to the current year ED 279 to understand why your subsidy allocation changed through the lens of the factors we have just discussed. Still stumped? Contact: tyler.backus@maine.gov or paula.b.gravelle@maine.gov or ida.batista@maine.gov 10