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TO:†††† ††††††††††† Superintendents of Schools

FROM:††††††††††† J. Duke Albanese, Commissioner

DATE:††††††††††† January 10, 2002

RE:†††† ††††††††††† PRELIMINARY FY 2002-03 Subsidy Printouts

Enclosed is a copy of the preliminary ED261 computer printout for your school unit(s).

As you recall, in December I had recommended a 4% increase in General Purpose Aid for Local Schools (GPA) from FY 2001-02 to FY 2002-03 if the economy rebounded. At the end of the first session of the 120th Legislature, Governor King and many members of the Legislature indicated their intent to bolster GPA funding in FY 2002-03, if at all possible, beyond the $718.3 million level that is now in the biennium budget.Unfortunately, Governor King has to deal with the fiscal constraints that the State is now facing because of lowered revenue projections.He has therefore included, in his supplemental FY 2002-03 budget, $718.3 million in GPA (a 2.34% increase) that was already appropriated at the conclusion of the first session of the 120th Legislature.I am grateful to the Governor for not cutting GPA below this level of $718.3 million for FY 2002-03, nor suggesting a reduction in the current FY 2001-02 appropriation.

The attached preliminary ED261 printout(s) details the GPA amount that would be provided if the Governorís proposed FY 2002-03 budget for GPA, representing a statewide increase of 2.34%, or $718.3 million, is enacted into law.This printout includes calculations for a $4 million cushion that is proposed by the Department. ††I believe that such cushions will be necessary during the period of transitioning to Essential Programs & Services, and that a cushion is especially important during a year in which the GPA appropriation would increase modestly.The attached printout includes a proposed cushion amount which is equal to a prorated portion (estimated to be 24.82%) of the loss in GPA, excluding the GPA for debt service and bus purchases, for all school administrative units that meet the following criteria:

a.       The school administrative unitís education mill rate during FY 2001-02 must be at least 9 mills, and

b.      The school administrative unitís per-pupilstate valuation for FY 2002-03 must be no greater than twice the state average: 2 X $379,214 = $758,428.

The proposed GPA funding for FY 2002-03 would continue to move Maine towards more adequate school funding and implementation of the Essential Programs & Services funding model.However, because of the Stateís limited financial resources, and also because of the burden on local property taxpayers, I am proposing an extension of the timeline for achieving the FY 2002-03 targets that have been established in statute for the school funding formula.The attached printout reflects, for both the Per-pupil Guarantee and the Program Costs subsidy reduction percentage, moving only 1/4th of the distance to the statutory target for FY 2002-03.The following table summarizes the progress to date in meeting these legislative targets, and my proposal for modifying the FY 2002-03 targets:



Prior to establishing targets

1st Year:

FY 1999-00

2nd Year:

FY 2000-01

3rd Year:

FY 2001-02

4th Year:

FY 2002-03


Legislative target: Per-pupil Guarantee






(proposed modified target: $4,816)


Legislative target: Program Cost Reduction Percentage






(proposed modified target: ‑3.74%)




(Targets met)

(Targets met)

(Targets met)


*The legislative target for transportation operating costs in FY 1999-00 was Ė14.38%.

Keeping with recent practice, this printout is based on the Governorís proposed budget of $718,358,591, hoping that the final GPA appropriation will not be below this level.Please note that the ED261 printout is preliminary only. A sticker on the first page of the printout notes that this printout is ďproposed/not enactedĒ.The appropriation amount and/or subsidy calculation methods might be changed by the Legislature.Further, the cushion calculation that is included in this printout represents only the Departmentís proposal.The final cushion, if the Legislature chooses to enact one, might differ from the Departmentís recommendation.For these reasons, and for the other reasons cited below, please be advised that this printout is provided for planning purposes only.

In analysing your school unitís printout(s), keep in mind the power of the variables of state valuation and student enrollment.For your unit(s), subsidy is largely determined by your trends in state valuation and enrollment.Many school units are projected to receive less GPA during FY 2002-03 than they are receiving during the current year.The small increase in GPA from FY 2001-02 to the proposed FY 2002-03 level (approximately $16.4 million) contributes in some degree to the number and magnitude of such changes.However, the amount of GPA for each school administrative unit depends in large part on the unitís demographics, especially state valuation of property and numbers of pupils.Changes in these demographics are significant factors in determining each unitís amount of GPA.In general, if a unitís pupil count decreases from one year to the next, then its GPA amount will decline (assuming all other factors remain unchanged).Current statutes, which provide for averaging pupil counts over four (4) census points if there is a decline in the number of pupils, will soften this impact.Similarly, if a unitís state valuation amount increases from one year to the next, then its GPA amount will also decline (again assuming all other factors remain unchanged). Even during the decade of the 1980ís, when state revenues were plentiful and 6% annual increases in GPA were common, many units experienced annual declines in GPA because of changes in their demographics.

††††††††††† The following additional points should be noted:


ü                     Adult Education pupil counts, per 20-A MRSA, Section 8605(2) on line 29, are estimates only.These will be replaced with actual counts as soon as the data for the second half of the year is available (Report of Adult Education for Subsidy Purposes Ė July 1, 2001 to December 31, 2001).

ü                     Subsidies for approved bus purchases and for approved leases may change following receipt of the unit's EF-M-45 for FY 2002.

ü                     NO ESTIMATES of the principal and interest amounts for unbonded school construction projects are included in this printout.Exact amounts will be added to a revised printout for your unit when actual repayment schedules are received.If you have an unbonded project, you must estimate the local and state impact and include these amounts in your budget for FY 2002-03.

ü                     The estimated subsidy reduction amounts for the Maine Indian Education school units will be replaced with final amounts, when these become available.

ü                     A school administrative unit's subsidy may be reduced, as a result of (a) not raising the full amount of the required local share of the Foundation Allocation for FY 2002-03, or (b) an unallocated ending balance exceeding 3% of the FY 2001-02 budget, which has not been rectified in the unit's FY 2002-03budget.

ü                     Special Education amounts on lines 32, 33A, and 33B amounts have been reduced by the Out-of-District placement adjustments received in June 2001.

Finally, I must advise you of a change regarding State Agency Client bills, which have been increasing significantly.Maine statutes require that the State pay State Agency Client bills only within the limits of available appropriations.The Department has been paying 100% of these bills in recent years.In the funding level that is part of the state budget for FY 2002-03, I have included a substantial increase of 25% in the adjustment line for State Agency Clients.However, even with this increase, costs are rising so rapidly that the Department must begin, in FY 2002-03, to pay only a prorated portion of all State Agency Client bills.Furthermore, it will be necessary to postpone payment of some FY 2001-02 State Agency Client bills until the first month of FY 2002-03.The proration must apply to bills that are carried forward, as well as to new bills received during FY 2002-03.School administrative units will be responsible for the unpaid portion of all State Agency Client bills, which may be claimed as a subsidizable Special Education cost.We are reviewing cost-containment strategies with agencies providing placements for these students.

If you have any questions regarding the information in this letter, please call Suzan Cameron or Joanne Allen of the M.I.S. Team at 624-6790.

As the second session of the 120st Legislature unfolds, be assured that the Department of Education will work closely with the Maine School Superintendentsí Association and the Maine School Boardsí Association to keep you apprised of developments regarding General Purpose Aid.