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To:                   Superintendents of Schools, Board Chairs, and Members of the State Board of Education


From:               J. Duke Albanese, Commissioner


Date:                February 11, 2003


Subject:            Governor’s Recommended Biennium Budget, FY 2004-2005:  Education Highlights



            Governor John E. Baldacci has submitted the particulars of his recommended state budget for the FY ‘04-‘05 biennium.  As you know, with the state facing a significant revenue shortfall, the Constitution requiring a balanced budget, and the economy sluggish with no real signs of imminent recovery, the Governor has put forward recommendations based primarily on the spending levels in this year’s FY ’03 budget.


            Below, I have highlighted major features of this recommended budget as it pertains to our schools and to the Department.  Superintendents are advised that our staff will work diligently to prepare your local 261 subsidy printouts, striving to have them in your hands by this Friday, February 14, 2003.  Those printouts will reflect the level of General Purpose Aid (GPA) recommended by the Governor with distribution based on current law and up-to-date changes in demographics like enrollments and state valuation. 


Highlights’ - Education, K-12 – Governor’s proposed biennium budget, fy ’04-’05


General Purpose Aid to Schools:             FY ’04:  $728,026,120

FY ’05:  $720,817,941 - Plus $5,000,000 for K-12 Education Cost Savings Incentive Program (These monies are included in the Department of Administration and Financial Affairs 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 on the FY ’03 supplemental budget this week, the second curtailment has been approved, thus lowering GPA for distribution this year, FY ’03, to $714,543,588. 


            The $728,026,120 level, 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. 


            The recommended 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.


            For FY ’05, the level of GPA has been set at $720,817,941 with a new K-12 Education Cost-Savings Incentive Program funded at the $5 million level and included in the Department of Administration and Financial Affairs in the budget bill.  Proposed statutory language states that “the purpose of the program is to provide a financial incentive to school administrative units to adopt administrative and other service delivery practices that: 1.) Achieve cost-savings in operating funds related to administrative services and other service deliveries; and 2.) Direct the use of the monies saved under subsection 2 for funds related to instruction.”  Criteria will be developed by the Department of Administration and Financial Affairs in consultation with the Department of Education and Maine School Management Association.


Department of Education


            To meet targeted areas for reductions in spending, virtually all accounts in the Department’s budget are frozen for FY ’04 and for FY ’05 at the FY ‘03 level.  Several of our teams’ operating budgets are actually set below FY ’03 levels.


            While the Department did not experience layoffs like many other agencies, a major reorganization has been proposed by the Governor.  Nine individuals who work within the accounting unit of our Finance team would move from DOE to the Department of Administration and Financial Affairs.  Another individual who staffs the personnel office would also move to DAFS.


            Further, the vacancy in the position of Director of Special Programs and External Affairs – formally held by Yellow Light Breen – has been eliminated.  Two other key positions, the vacant Deputy Commissioner position held previously by Judy Lucarelli and the position of Team Leader for Management Information Services, a position that Jim Watkins will be retiring from in just three weeks, have been preserved.


            Hopefully, this information is helpful as you weigh the potential impact of the State’s fiscal crisis on local schools and the Department.  Be assured that we will keep you apprised of new developments as they unfold.