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TO:                  Superintendents of Schools, School Board Chairs, State Board of Education


FROM:            J. Duke Albanese, Commissioner


DATE:             February 21, 2001


RE:                   General Purpose Aid, FY 2002-2003; Debt Service Limit; Fingerprinting



            I trust that this February break finds you well and offers your schedule and staff a needed respite as we experience a more typical Maine winter.  Below please find updates of three key policy areas that are before the 120th Maine Legislature.  Hopefully, you will find this information helpful.



General Purpose Aid, FY 2002-2003


            This week the Joint Standing Committee on Education and Cultural Affairs and the Joint Standing Committee on Appropriations and Financial Affairs will continue their consideration of General Purpose Aid appropriation levels for the next biennium.  As you know, last December I recommended a 6% increase in each year of the biennium, and after due consideration and in light of a host of other needs for state government funding, Governor King recommended 5% in FY 2002 and 3% in FY 2003.  The Governor red-flagged the second year, indicating that if additional monies are available, GPA would be a priority.


            Over the last several weeks the Committees have worked at a fast pace on the education budget and especially on GPA which is the largest line in the overall state budget.  In fact, in all of the years that I have participated in the process I cannot remember another time when issues regarding distribution and cushions surfaced so early.


            I must report that I have answered numerous questions, regarding two issues on GPA:  1) the so-called “erosion factor” that adversely affects the Operating part of the formula and 2) the inclusion of $1.3 million for the development and implementation of local assessment models.  Regarding the formula, be advised that I have repeatedly clarified for the Committee that the operating and program amounts under the Governor’s 5% for FY 2002 represent $436,674,146 for Operating and $163,754,654 for Program, an amount totaling $600,428,800, an increase of 5.24%.  While it is true that the Operating increase is 2.26%, one can’t discount an increase of 14.13% for Program costs.  As stated above, in total, foundation spending would increase by 5.24% in the aggregate with the Governor’s recommendation.  In calculating GPA, our staff determines the amount of funding for the Adjustments and Debt Service sections of the formula, then they calculate the foundation amount, breaking down Operating and Program costs. 


As you know, the Recommended Funding Level that I presented last December would implement the targets in statute that raise the Per Pupil Guarantee for Operating costs while working to eliminate the reduction percentage in Program costs.  Clearly, it takes “high test” dollars to undertake the latter while also addressing the former.  And, to reiterate, your monthly local subsidy checks include the Operating plus the Program costs.


            At this time, the Appropriations Committee is beginning to see firsthand the budget dilemma that the Governor faced in shaping his recommendations.  They are starting with the Governor’s 5% / 3% recommendation for the biennium, asking the Education Committee to examine carefully its recommendations for 5.7% in FY 2002 and consideration for at least 5% in FY 2003.



Debt Service Limit


Last Wednesday, the Maine State Board of Education unanimously endorsed recommending significant increases in the State’s annual debt service limit for school construction, enabling the approval of at least $150 million in new building projects in 2003 and 2004.  The proposal, developed by the State Board and the Department, is part of a package of recommendations being submitted to the Legislature for consideration.  You should know that I have secured Governor King’s endorsement of this proposed change in debt service.


Basically, the Board endorsed raising the annual limit for construction debt payments from the current level of $84 million in place for 2004-05, to $90 million in 2005-06 and to $96 million in 2006-07.  As you know, the debt service limit represents the annual payments made by both the State and locals on school construction bonds.  The proposed increase in the annual limit would permit the financing of $150 million in projects to be given concept approval in 2003 and 2004.  State subsidy varies for each project, based on local ability to pay, but the level of state subsidy is significant, averaging 72% statewide.


In April 2000, the 119th Legislature adopted the Department’s and State Board’s recommendation to increase the debt service limit from a level of $74 million to $84 million for fiscal year 2004-05.  Last year’s increase allowed the approval of $200 million in projects during the period 2000-2002.  Previously, the debt service limit had been frozen at $67 million for six years from 1993 to 1998.  It was during this time that data was being collected regarding a serious need for improved school facilities statewide.  At our urging the Governor named a Commission and the recommendations of that group led to the School Facilities Act of 1998.


Due to the timeline for local planning and approval, Department of Education work, State Board approval, construction and bonding, increases in the debt limit for fiscal years 2005-06 and 2006-07 will enable the State Board to give more local school units the green light for concept approval over the next three years, with the financial impact hitting in subsequent years.  The construction projects that will be approved with the additional funding and lower interest rates could include a few projects on the current rating priority list, but due to the required timelines, the primary impact will be additional funding for projects in the 2-year rating cycle submitting applications by August 2001. 

The recommended construction increases will not impact the current state budget, but will require additional state subsidy in fiscal years 2005-06 and 2006-07.  Due to the long-term impact on state subsidy, the Department analyzed the potential future impact on the state budget.  Assuming modest increases in overall state funding for education (“General Purpose Aid”) over the next 5 years, the proposed increases would maintain subsidy for school construction as a fairly constant proportion – about 9% -- of total General Purpose Aid.


Be advised that the Department strongly supports the State Board recommendation to sustain a high priority for school facilities improvement, addressing the considerable critical needs that exist across the state.  Over the last three years, there has been an extraordinary state response to address the need to improve the physical spaces where our students and teachers work.  This recommendation furthers the commitment to modernize and upgrade our public school buildings for the next generation of school children.  With this recommendation $150 million of new major capital construction can move forward.  This increased debt-service limit when combined with our recommendation for $30 million in bonds for FY 2002-03 for the Revolving Renovation Fund gives Maine two important tools to improve our school facilities.



Fingerprinting Update


            In recent days there has been a call for the release of various data regarding the results of background checks of school employees.  Caught in the midst of a debate over protecting the confidentiality of educators and other employees on the one hand, and providing information regarding the effectiveness of the public policy on the other hand is a Legislature made up of both veterans and newcomers, individuals who experienced last year’s deliberations and recently elected lawmakers who may have a personal bent, but need further information.  Attorney General Steve Rowe interceded last week, issuing a legal opinion that basically prohibits our office from releasing any information.  It is now up to the Legislature to determine whether or not they wish to change the law, allowing the release of information according to some aggregate profile of numbers of individuals fingerprinted, denial actions taken, categories of offenders, or whatever.


            The Department’s position has been clear:  we intend to continue to implement the law, in cooperation with the State Police; we advocate keeping the law on the books, protecting children through a strong message to would-be school employees; and we intend to abide by the Attorney General’s opinion about the release of information.  If the Legislature chooses to change the statute to call for the release of certain statistical information, then we would be obligated to change present practice.



            Hopefully, the updates on GPA, debt service, and the background checks statute are helpful.  We’ll keep you abreast of further developments.