Island towns struggle with state's new school formula

By Janet Hefler - October 26, 2006

Associate commissioner of education Jeff Wulfson faced the unenviable task of trying to sell the state Department of Education's (DOE) controversial wealth-based formula for allocating regional school district costs to a room full of skeptical Island town officials, educators, and taxpayers at a meeting Oct. 18. "I'm confused" was the most often heard remark as people left at the meeting's end.

The wealth-based formula is a divisive subject for Island towns, as it has been for many across the state. The proposed DOE regulations governing school districts were passed under the Education Reform Act of 1993, and the wealth-based formula was to take effect this year.

The current regional formula, agreed to and used by the six Island towns, is based on enrollment. The state's new formula uses an "aggregate wealth model" for determining required local contribution amounts, with property values and personal income levels given equal weight.

Using the new formula will result in a reduction in school costs for Aquinnah, Edgartown, and Oak Bluffs, while leaving Chilmark, Tisbury, and West Tisbury scrambling to come up with more money for their towns' shares. For example, while Oak Bluffs's share for the regional high school would decrease by almost $400,000, Tisbury's share would increase by about $314,000.

The Martha's Vineyard Finance Association, a voluntary association of finance committees Island-wide, sponsored the public forum at Martha's Vineyard Regional High School (MVRHS). It marked the first discussion between representatives from all six Island towns on the subject. State Representative Eric Turkington also attended.

Speaking to an audience of about 50, including selectmen, town officials, finance and school committee members, educators, and taxpayers from across the Island, Mr. Wulfson outlined the details of the formula and sought to reassure everyone that after initially higher costs as the formula is phased in over five years, the towns' costs will level out.

Since the education reform act of 1993 was passed, Mr. Wulfson explained, the goal of the Chapter 70 state aid formula has been to ensure that all school districts attain "foundation budget" spending levels, a minimal amount of local revenue that cities or towns are required to contribute to schools, through a combination of local property taxes and state aid.

The state calculates a school district's or town's foundation budget by multiplying the number of students in 14 enrollment categories (for example, special education, limited English, vocational education) by cost rates associated with various educational programs, grade levels, and student needs. A wage adjustment factor also figures in.

The formula also sets a statewide target of 59 percent local funding and 41 percent state funding of the foundation budget. Target percentages will vary depending on a community's wealth.

In the past the Massachusetts state aid formulas were determined by dividing either the equalized property valuation (EPV) or some form of income by a denominator such as enrollment or population. The new formula calculates a town's aggregate wealth based on its total EPV and its total annual income.

Another piece recently added to the formula especially affects the Cape and Islands, Mr. Wulfson said, where high property values are disproportionate to taxpayers' income levels. The legislature set a cap of 82.5 percent on the amount of local contributions towns must make to a school districts' foundation budget, so that every district is guaranteed to receive state aid for at least 17.5 percent of the foundation budget.

The legislative debate about the formula regulations is by no means over, Mr. Wulfson said. Two topics under fire are the way the towns' foundation budgets are calculated, and the amount of the state and local funding percentages.

The Massachusetts state board of education (BOE) has been accepting public comments regarding the regulations, with a deadline of October 27. Superintendent of Martha's Vineyard Public Schools James Weiss submitted a letter to the BOE this month on behalf of the school committees Island-wide, asking that the board to delay the formula's implementation until serious flaws in the data collection on which it is based can be corrected.

As Mr. Weiss wrote in his letter to the BOE, one of the most serious flaws in the state's calculation of a town's foundation budget is that median income is determined by using the mailing address on an individual's income tax return as the person's town of residence.

This presents a problem on Martha's Vineyard where many residents use a post office in another town other than where they live. If they are counted as residents of that town based on their mailing address, their income levels inflate the town's total and skew the data on which the foundation budget is based.

In a follow-up phone call this week, Tisbury's treasurer and tax collector Tim McLean said he is analyzing the town's foundation budget to try to determine whether an inflated income amount from non-Tisbury residents may be contributing to making it significantly higher than those of other Island towns.

Mr. Wulfson said last week the DOE is aware of the mailing address issue and taking steps to address it. He assured everyone, however, that income is not really an issue for Vineyarders, because the Island's property values are so high in proportion to the number of students that towns will qualify for the 82.5 percent ceiling on their foundation budgets.

Given the opportunity to answer questions, members of the audience remained polite, although many showed signs of frustration or exasperation. The old adage "Don't shoot the messenger" came to mind.

Chilmark selectman J.B. Riggs Parker asked if one town in a school district votes to go with the state wealth-based formula, then would all of the towns have to use it? Mr. Wulfson said the legislation requires school districts to use the state's wealth-based formula unless every town in the district concurs on a regional agreement. Several people commented on the new formula's negative effect of pitting towns in regional school districts against one another.

The transition period to phase in the formula, 20 percent each year for 5 years, is designed to ease some of the state's burden in having to provide extra funding to towns that are supposed to be increasing their foundation budgets. Aquinnah selectman Michael Hebert asked what would happen if all six Island towns stayed with their regional agreement through the five-year transition period to avoid the swings in allocation costs.

Mr. Wulfson said that if the legislature allowed Island towns a one-year transition phase, then a lot of other towns would want the same, which would cause a decline in local contributions to school districts and a drop in state aid funds.

MVRHS principal Peg Regan advocated for Island towns to stick with their regional agreements until they have had time to examine the new one and calculate what the costs will be over the next 3 to 5 years. Along those lines, Edgartown selectman Margaret Serpa said her selectman board voted to stay with the regional agreement now and recommend it to town voters.

Despite the arguments in favor of keeping the current regional agreement, comments from Oak Bluffs and Aquinnah residents made it clear they are leaning towards a switch to the wealth-based formula that will keep money in their town coffers now, not later.

Aquinnah voters actually were set to vote on whether to switch to the wealth-based formula at a special town meeting Tuesday night, but due to lack of a quorum it was postponed until tonight at 7 pm.

As a next step, Mr. Wulfson offered to sit down with Mr. Weiss and his staff to come up with some cost projections using the wealth-based formula for Island towns over the next several years.