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ADMINISTRATIVE LETTER  # 30

 

POLICY CODE: DB

                                                           

 

TO:                   Superintendents of Schools

 

FROM:             J. Duke Albanese, Commissioner

 

DATE:              June 20, 2002

 

RE:                   Revised GENERAL PURPOSE AID (GPA) FUNDING FOR FY 2002-03

 

 As you know from my communication of June 19, 2002 (Informational Letter #90), the Governor is implementing a $10 million emergency curtailment of General Purpose Aid for Education (GPA).  Key components of that letter include:

On July 1, 2002 – the start of the 2002-03 fiscal year – the total amount of General Purpose Aid to schools at the State, aggregate level, will be curtailed by $10 million.  Thus, General Purpose Aid to schools will be reduced from $730,817,941 to $720,817,941.  This curtailment represents a 1.37% reduction. 

In actuality, the impact of the curtailment on subsidy checks will total $8 million since we have determined, due to favorable bond interest rates and a good construction market, that we can apply $2 million in unneeded funds from Debt Service to cover our curtailment.  The curtailment will be applied over the twelve subsidy checks of FY’03, commencing with the July check which should be mailed on or around July 24, 2002.   

In essence, the Governor has agreed to curtail GPA to a smaller level of growth – basically at a point where the Legislature found itself before the improved revenue reforecast in late February.  At that time, the Legislature and the Governor worked to add $10 million to GPA.  Now with the revenue falling short, that $10 million is being curtailed.  Total GPA at $720,817,941 will represent an increase of 2.69% instead of 4.11%.

 

The FY 2003 appropriations for GPA and the emergency curtailments are broken out as follows:

 

Category

Enacted by the Legislature

Emergency Curtailment

Reduced Amount

 

 

Foundation Allocation (Operating Costs, Program Costs, and Minimum Subsidy)

$617,408,805

$7,319,904

$610,088,901

 

Debt Service

$63,767,101

$2,000,000

$61,767,101

 

Adjustments (including the Cushion)

$49,642,035

$680,096

$48,961,939

 

Total

$730,817,941

$10,000,000

$720,817,941

 

After discussions with my staff and representatives from the Attorney General’s Office, we have chosen a curtailment methodology which both adheres to the law and to the elements of the school funding formula to carry out reductions at the school unit level.    The methodology for the curtailment of the foundation allocation and minimum subsidy will mirror the “ability to pay” provisions in the operating component of the school funding formula – that is a curtailment based on 85% property valuation and 15% income. The calculation of the foundation and minimum subsidy curtailment is the unit’s State share of the foundation allocation (line 40D) times the unit’s local share percentage for operating costs (line 30) times a proration percentage of 2.40125%.  All Adjustments will be reduced by the 1.37% – a total reduction of $680,096.  These adjustments include Geographic Isolation Grants, Private School Services Grants, State Ward funds, State Agency Client funds, English as a 2nd Language, Out-of-District Placement adjustment, Long-term Drug Treatment adjustment, Learning Results Implementation funds, and the cushion.  For State Wards and State Agency Clients, the State will continue its practice of paying 100% of all bills, although some bills received at the end of the fiscal year may be paid with FY 04 funds in July, 2004.

The enclosed are the revised ED261 subsidy printout(s) that includes the emergency curtailment amount on line 59F.  At this time, the amount on line 59F reflects the emergency curtailment amount applicable to the foundation, minimum subsidy, geographic isolation grants, and the cushion.  Please note that this printout is labeled “Emergency Curtailment: June 20, 2002”, to distinguish it from the previous printout that was provided to you in March.

There will be school units that will implement this curtailment by reducing their expenditures.  For those units that cannot reduce expenditures in response to this emergency curtailment and must reconsider their 2002-03 budgets, enclosed is a “Budget Reconsideration Advisory”.

For questions regarding the ED261 printout, please call Suzan Cameron or Joanne Allen of General Purpose Aid Support Services at (207) 624-6790 or email to suzan.cameron@state.me.us or joanne.allen@state.me.us

 

 

JDA:SCC

 

 

Budget Reconsideration Advisory

 

For school administrative units that have already passed their 2002-03 budgets, procedures to reconsider your budgets vary depending on your type of school administrative unit and the budget process utilized by your school administrative unit.  Units should consult their legal counsel for questions regarding the reconsideration of a budget specific to their school administrative unit.

 

Municipal School Unit – City Councils, Municipal Referendum, or Town Meeting: School boards seeking budget reconsideration in a municipal school unit must seek direction from municipal officials.  Municipalities should consult their legal counsel regarding issues on budget reconsideration specific to their municipality.

 

School Administrative District (SAD) or Community School District (CSD) Referendum:  In general – if the district board declares that a financial emergency exists, they should proceed pursuant to the “Special Budget Meeting” statute 20-A M.R.S.A. §1309 for SADs and §1701(8) for CSDs.  SADs or CSDs should consult their legal counsel regarding issues on budget reconsideration specific to their school district.

 

School Administrative District (SAD) or Community School District (CSD) District Budget Meeting:  In general – if the district board declares that a financial emergency exists, they should proceed pursuant to the “Special Budget Meeting” statute 20-A M.R.S.A. §1309 for SADs and §1701(8) for CSDs.  SADs or CSDs should consult their legal counsel regarding issues on budget reconsideration specific to their school district.

 

For Municipal School Units, Maine Municipal Association may be able to provide some assistance regarding municipal law and budget reconsideration.

 

For School Administrative Districts or Community School Districts, Maine School Management Association may be able to provide some assistance regarding SAD/CSD law and budget reconsideration.

 

Sections of school law applicable to budget reconsiderations are 20-A M.R.S.A. §15618(2) for all school administrative units, §1309 for school administrative districts, and §1701(8) for community school districts.