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TO:                  Superintendents of Schools


FROM:            J. Duke Albanese, Commissioner


DATE:             February 27, 2002


RE:                  Update:  Biennium Budget


            As you know, deliberations on the state’s biennium budget for FY ’02 – ’03 have been continuing over the last several weeks.  The Administration and the Legislature have been anxiously awaiting revenue reprojections, hoping that Maine’s economy is proving more resilient than some predicted, allowing for an upward adjustment to the revenue that funds state programs. 


            Last week the Revenue Forecasting Committee did make adjustments, increasing expected revenues for the ‘02-’03 biennium by $91.2 million.  Today the Governor presented his “Change Package” – those restorations and adjustments that he feels are priorities in light of the improved revenue picture.


            Importantly, among those recommended changes are an additional $9,159,084 for state agency clients and state wards, providing the Department with an amount we believe is sufficient to cover reimbursements to schools this fiscal year and in FY ‘03.  If the Appropriations Committee and the full Legislature concur, then we will have the needed assistance in this biennium to meet our full commitments without prorations, while we work on further analysis of the causes of such growth and shape any needed policy recommendations. 


            The Department has experienced explosive growth in the state agency clients / state wards account in recent months, and we alerted local school districts, the Legislature, and the Governor about this situation in December as part of the annual Recommended Funding Level.  Subsequently, I have indicated that the 8.5% increase in appropriation for this fiscal year, ’02, was going to be insufficient, and I was very concerned about ’03, even though the recommended funding level represented a 25% increase.  Three weeks ago, I convened the Commissioners,

Deputy Commissioners, and senior staff of the Departments of Education, Human Services, and Behavioral and Developmental Services to help address this issue.  A group of senior staff from across these agencies, led by Deputy Commissioner Judy Lucarelli will be advising me and ultimately the Legislature in the weeks ahead.


            Regarding General Purpose Aid (GPA), the Education Committee has recommended an additional $7.8 million toward the operating portion of the formula.  The Committee made this request their second highest priority (additional funding for state agency clients / state wards has been the top priority).  Both requests were contingent on additional revenues becoming available.  At this time, the Governor did not include additional funding in the formula part of GPA, given the other deep cuts in state government.


            In the next week, the Education Committee will engage in serious conversations about the distribution of GPA, likely focusing on the $718.3 million already in the budget and the basis of your January 2002 ED 261 printout.  If legislators on the Appropriations Committee and in leadership signal that they would support more funds, then they will work on a distribution plan with more money for GPA.  I’ll keep you apprised of these developments.


            Finally, you should know that the Education Committee has proposed restoration of $130,000 in Adult Education subsidies, an amount pared back in the original budget request.  Before the downturn in the economy there was a 6% increase in the budget for FY ’03 for Adult Education. It was reduced to 3% when revenues fell short. 


As deliberations continue regarding the state budget, we will update you.  Be advised that the Legislature seems intent on adjourning in late March or in the early days of April.