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ADMINISTRATIVE LETTER: 27
POLICY CODE: DB
TO: Superintendents of Schools
FROM: J. Duke Albanese, Commissioner
DATE: February 12, 2003
RE: PRELIMINARY FY 2003-04 Subsidy Printouts
As promised, Department staff have worked diligently these last several days to prepare local printouts on GPA for FY ’04. Enclosed is a copy of the preliminary ED261 computer printout for your school unit(s).
As you know, with the state facing a significant revenue shortfall, the Governor has put forward recommendations based primarily on the spending levels in this year’s FY ’03 budget. For FY ‘04, the recommended budget includes a funding level of $728,026,120 for GPA. This figure has been built on the FY ’03 GPA level after the first curtailment that lowered GPA to $720,817,941. Following the Legislature’s action and the Governor’s concurrence on the FY ’03 supplemental budget this week, the second curtailment has been approved, thus lowering GPA for distribution this year to $714,543,588.
The $728,026,120 level for FY ‘04, as proposed by the Governor in the budget bill, includes, but does not distribute at this time, a $3 million cushion. Criteria to guide distribution of these funds will be determined by the Legislature. Just yesterday, I did a briefing for the Joint Standing Committee on Education and Cultural Affairs on the proposed amounts for GPA and questions were raised about distribution and about a cushion. In preparation for upcoming budget hearings before the Appropriations Committee, both the Department and the Education Committee will be preparing our analyses of the Governor’s recommended funding levels.
Be reminded that the proposed budget provides for distribution of GPA in FY ’04 based on current statute with targets for the Per-pupil Guarantee and Reduction Percentage for Program Costs frozen at FY ’03 levels.
The attached preliminary ED261 printout(s) details the GPA amount (excluding the cushion) that would be provided if the Governor’s proposed $728,026,120 GPA appropriation for FY 2003-04 is enacted into law.
Be further advised that the attached GPA printout, and the GPA portion of the proposed budget, is based on current statute, not on the Essential Programs & Services Funding Model. The Legislature will consider this new funding approach during the current Legislative session. If the Legislature chooses to enact the new approach into law, and the Governor concurs, then implementation in FY 2003-04 or in subsequent years could go forward with the necessary statutory language incorporated into the final budget bill or in a separate bill.
To reiterate, this printout is based on the Governor’s proposed budget of $728,026,120 (with a $3 million cushion amount set aside and not included in the printout). It is my belief that the final GPA appropriation will not be below this level. Please note that the ED261 printout is preliminary only. A label on the first page of the printout notes that this printout is “proposed/not enacted”. The appropriation amount and/or subsidy calculation methods might be changed by the Legislature. Further, the cushion calculation has not yet been determined. For these reasons, and for the other reasons cited below, please be advised that this printout is provided for planning purposes only.
In analyzing your school unit’s printout(s), keep in mind the power of the variables of state valuation, student enrollment, and the overall amount of GPA appropriated. For your unit(s), subsidy is largely determined by these trends. Many school units are projected to receive less GPA during FY 2003-04 than they are receiving during the current year. The small increase in GPA from FY 2002-03 to the proposed FY 2003-04 level contributes to the number and magnitude of such changes.
Remember, changes in your demographics are significant factors in determining each unit’s amount of GPA. In general, if a unit’s pupil count decreases from one year to the next, then its GPA amount will decline (assuming all other factors remain unchanged). Current statute, which provides for averaging pupil counts over four (4) census points if there is a decline in the number of pupils, will help soften this impact. Similarly, if a unit’s 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 1980’s, 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:
§ Adult Education pupil counts, per 20-A MRSA, Section 8605(2) on line 29, are actual for all but a few school administrative units. For those school administrative units that still have estimates, these will be replaced with actual counts when the data for the second half of the year has been submitted (Report of Adult Education for Subsidy Purposes – July 1, 2002 to December 31, 2002) and the Legislature has enacted a funding level.
§ Subsidies for approved bus purchases and for approved leases may change following receipt of the unit's EF-M-45 for FY 2002-03.
§ 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 2003-04.
§ The estimated subsidy reduction amounts for the Maine Indian Education school units will be replaced with final amounts, when these become available.
§ 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 2003-04, or (b) having an unallocated ending balance exceeding 3% of the FY 2002-03 budget, that the local school board has not agreed to disburse in the next fiscal year or over a period not to exceed 3 years.
§ Special Education amounts on lines 32, 33A, and 33B amounts have been reduced by the Out-of-District placement adjustments received in June 2002.
Finally, be advised that I do not currently anticipate a problem in fully funding all State Agency Clients / State Wards costs incurred during FY 2003-04. As I advised you earlier, I am hopeful that even with the FY 2002-03 curtailments, there will be enough funds so that no proration of payments for these students will be necessary this year. Furthermore, the Governor’s proposed budget includes my recommendation for a 7.8% increase in appropriations for FY 2003-04, over the curtailed FY 2002-03 amounts. The 7.8% represents a three-year average of annual increases in special education costs to local school units. Assuming that there is enough funds for the FY 2002-03 costs, and assuming that there are no unexpected increases next year in the numbers of State Agency Clients and State Wards or unexpected increases in the per-pupil costs for these students, the proposal for FY 2003-04 should be sufficient.
For Out-of-District Placements we have also budgeted a 7.8% increase, over the curtailment amount. As is the case each year this will entail a proration. Those costs not reimbursed through this program are eligible for reimbursement through the Program Costs component of the formula in FY ’06.
My advice to school superintendents about both State Agency Clients / State Wards and Out-of-District Placements is to be most conservative in anticipating revenues for FY ’04. Being most careful in your revenue estimates will be a safeguard if further curtailments are necessary.
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 first session of the 121st Legislature unfolds, be assured that the Department of Education will work closely with you and the Maine School Management Association to keep you apprised of developments regarding General Purpose Aid and other school funding issues.