Revised Spreadsheet Online

INFORMATIONAL LETTER: 42
POLICY CODE: DB

TO: Superintendents of Schools
FROM: Susan A. Gendron
DATE: November 21, 2008
SUBJECT: Revised Spreadsheet Online

A spreadsheet showing the effect of the $27 million reduction in General Purpose Aid to Education (GPA) as a result of the Governor’s curtailment order has been posted on the Department website. Please be sure to read the methodology posted on the same page.

It is important to understand that in calculating the reductions to each school administrative unit, we have not changed the total Essential Programs and Services allocation for the individual unit or the statewide total. We have re-run with the exact same calculations in the funding law, only with $27,046,649 less in state share. For minimum subsidy receivers, we have reduced the state share from 50 percent of special education EPS allocation to 45 percent.

Please also keep in mind that these figures reflect the proposed reduction. New ED279’s that reflect these proposed changes will not be issued until the Legislature enacts the curtailment provisions in the supplemental budget. As revenue projections are revised over the coming months, it could affect both the current year GPA as well as the projected GPA for the coming two-year budget which begins July 1, 2009.

The spreadsheet reflecting the curtailment/supplemental budget has been posted on the Department website at: http://www.maine.gov/education/data/eps/fy09/eps0809.html .

Background on the Curtailment

Governor John Baldacci announced Wednesday a package of proposed cuts to balance the State budget. These cuts include a reduction to the Department of Education of approximately $27.8 million in the current fiscal year, of which $27,046,649 would be from General Purpose Aid (GPA) to Education.

The Governor introduced the curtailment as the first of three steps that include:

the curtailment;
a FY 2009 supplemental budget that will go to the Legislature in December; and
the next two-year budget (FY 2010 and FY 2011).

Statutory language governing a curtailment does not allow the Governor to withhold subsidy without legislative action; it only allows him to delay subsidy payments from June 2008 to July 2009 (the beginning of the new fiscal year). For that reason, the Governor announced that he will include a $27,046,649 reduction to GPA in the FY 2009 supplemental budget. However, to ensure that the necessary reductions are made in the current fiscal year, he has also included the same amount in his curtailment order announced today as a delay of payment from June 2009 to July 2009. If the Legislature takes no action on the FY 2009 supplemental budget, the curtailment would result in a portion of the June 2009 subsidy payments being delayed to July 2009. It is important to understand that this is the SAME $27 million – not an additional amount. Enactment of the supplemental budget would replace the delay of payment with an actual reduction of subsidy by June 30, 2009. In addition, the curtailment order includes another $700,000 of cuts outside of GPA, including reductions to non-GPA items in the Department of Education General Fund budget, including adult education.

In step three, the Governor is proposing that another $27 million be reduced from the total FY 2010 and FY 2011 two-year budget, which starts July 1, 2009. We must all be mindful that revenue projections are changing. There will be a new projection this Friday, and additional projections in the coming months – all of which could further affect funding for all of state government, including GPA in the FY 2010 and FY 2011 two-year budget.

You can find information about the curtailment with supporting documents at: http://www.maine.gov/budget/budgetinfo/fy09curtailment.htm .