FY26 Chapter 70 Aid and Charter Reimbursements

July 2025

FY26 Chapter 70 Funding

FY26 Chapter 70 continues implementation of �the Student Opportunity Act (the SOA)

• FY26 Chapter 70 is $7,361,864,552, a $459 million increase (7.0%) over FY25
• The SOA establishes new, higher foundation budget rates in 5 areas:
• Benefits and fixed charges
• Guidance and psychological services
• Special education out-of-district tuition
• English learners
• Low-income students
• FY26 Chapter 70 includes rate changes above inflation toward the goal rates in these 5 areas and closes an additional 1/6th of the gap
• FY26 will be the fifth year of implementation of the SOA

3

The low-income threshold is 185% of the federal poverty level in accordance with the SOA

• The SOA restores the definition of low-income enrollment used prior to FY17, based on 185% of the federal poverty level, up from the 133% threshold used for the economically disadvantaged match from FY17 to FY22
• Statewide low-income enrollment for FY26 is 419,861, compared to 415,821 for FY25

​

• Starting in FY23, the Department has designated a student enrolled on October 1st as low income if the student is:
• Identified as participating in state public assistance programs, including the Supplemental Nutrition Assistance Program, Transitional Aid to Families with Dependent Children, MassHealth, and foster care; or
• Verified as low income through a supplemental data collection process; or
• Reported as homeless through the McKinney-Vento Homeless Education Assistance program application

4

The SOA also increases the assumed in-district special education enrollment percentages

• The SOA increases the rate for vocational students from 4.75% to 5% and from 3.75% to 4% for non-vocational students

​

• Proposed rate increases for FY26 close an additional 1/6th of the gaps, so the factors used for FY25 are 4.97% and 3.97%, respectively

5

On top of the targeted rate increases, all foundation budget categories have been adjusted upward for inflation

• An employee benefits inflation rate is applied to the employee benefits and fixed charges category
• Based on the enrollment-weighted, three-year average premium increase for all GIC plans
• For FY26 the increase is 6.13%

​

• An inflation increase of 1.93% has been applied to all other foundation budget rates, based on the U.S. Department of Commerce’s state and local government price deflator

​

6

The SOA also adds a new minimum aid adjustment to the formula

• This provision provides hold harmless aid to operating districts that otherwise would have lost aid due to the foundation budget factors
• Determines the aid that these districts would have received if foundation budget rates were only increased by inflation
• If this amount is higher than the revised formula amount, districts get the higher amount

​

7

The SOA codified the aggregate wealth model for determining local contribution requirements

• For municipalities with required contributions above targets, the requirement is reduced by 100% of the gap
• Cities and towns with combined effort yields greater than 175% of foundation have required local contributions set at not less than 82.5% of foundation
• Due to rapid increases to foundation, many communities are below target and fewer are eligible for excess effort reductions
• 224 communities are subject to below effort increments to bring their contributions closer to target compared to 48 in FY21 (year prior to implementation of the SOA)
• 79 communities are eligible for excess effort reduction compared to 201 in FY21

8

Charter school tuition and reimbursements

Tuition rates for Commonwealth charter schools are based on the same foundation budget rates used in Chapter 70

• Foundation budget rate increases being implemented in FY26 have been incorporated into our projected FY26 tuition rates

​

• In addition, charter school low-income enrollment for FY26 has been identified using the same eligibility criteria used for districts (see slide 4)

10

FY26 implements the 3-year (100%/60%/40%) schedule for transition aid tied to year over year tuition growth

• Funding for first year reimbursements is prioritized over funding for second year reimbursements
• The reimbursement formula for transitional aid to districts reflects the change enacted by Section 38 of the FY20 budget, with an entitlement of 100% of any tuition increase in the first year, 60% in the second year, and 40% in the third year
• The SOA requires that 100% of the total state obligation to be funded in FY26
• FY26 budget allocates $179 million for these reimbursements
• The facilities component of the tuition rate is $1,188 per pupil, with this cost fully reimbursed by the state as in prior years

11

Calculating Chapter 70 local contribution requirements and state aid

Goal of the Chapter 70 formula

• To ensure that every district has sufficient resources to meet its foundation budget spending level, through an equitable combination of local property taxes and state aid.

13

The updated formula includes three parameters to be specified in each year’s general appropriations act

• For FY26, these are specified as:
• Total state target local contribution = 59%
• Effort reduction = 100%
• Minimum aid = $150 per pupil

​

14

There are 6 factors that work together to determine a district’s Chapter 70 aid

15

Foundation Budget

• Enrollment
• Wage Adjustment Factor
• Inflation

​

Local Contribution

• Property value
• Income
• Municipal Revenue Growth Factor

​

There are three primary steps in determining each district’s Chapter 70 aid

16

Required Local Contribution + State Aid = a district’s net school spending (NSS) requirement

This is the minimum amount that a district must spend to comply with state law

Each district's foundation budget is calculated by multiplying the number of pupils in 13 enrollment categories by cost rates in 11 functional areas

17

All students are counted in categories 1−7; special education, English learner, �and low-income costs are treated as costs above the base and are captured in 8−13

Foundation budgets vary based on student needs, including concentrations of low-income students

18

Note: Chart excludes vocational and agricultural districts.

Determining each municipality’s target local share starts with the local share of statewide foundation

19

Calculate statewide foundation budget

Determine target local share �of statewide foundation

Statewide, determine percentages that yield ½ from property and ½ from income

Property and income percentages are applied uniformly across all cities and towns to determine the combined effort yield from property and income.

An individual municipality’s target local share is based on its local property value, income, and foundation budget

• The sum of a municipality’s local property and income effort equals its Combined Effort Yield (CEY)

​

​

​

​

• Target Local Share = CEY/Foundation budget (calculated at the city/town level)
• Capped at 82.5% of foundation (192 municipalities or 55% are capped)

20

Next the formula calculates each municipality’s preliminary local contribution (PLC) and makes adjustments relative to target to determine the required local contribution (RLC)

21

Preliminary contribution Required contribution

Municipal Revenue Growth Factors (MRGF) are calculated annually by the Department of Revenue. MRGFs quantify the most recent annual % change in each municipality’s local revenues, such as the annual increase in the Proposition 2½ levy limit, that should be available for schools

Once a city or town’s required local contribution is calculated, it is allocated among the districts to which it belongs

22

Town of Orleans

Foundation aid provides additional funding for districts to spend at their foundation budgets

• Start with prior year’s aid
• Add together the prior year’s aid and the required local contribution
• If this year’s foundation aid exceeds last year’s total Chapter 70 aid, the district receives the amount needed to ensure it meets its foundation budget

23

Foundation budget – Required local contribution = Foundation aid

(1) Foundation budget

Calculating Chapter 70 aid: Districts are held harmless to previous aid levels and guaranteed at least a $30 per pupil increase

• Districts are held harmless to the previous year’s level of aid

​

• 244 districts receive minimum aid increases of $150 per pupil in FY26

24

Districts receive different levels of Chapter 70 aid because their municipality’s ability to pay differs

25

Required Local Contribution + State Aid = a district’s net school spending (NSS) requirement

The aggregate wealth model has eliminated required excess effort, but in recent years effort shortfalls have increased

26

For communities that are below target, recent expansions in foundation budgets have resulted in required local contributions not keeping pace with the foundation budget increases

There are no longer any districts funded below target, while above target aid has increased

27

QUESTIONS?

Robert.F.O’Donnell@mass.gov

Meghan.Ryan2@mass.gov

Rob O’Donnell, Director of School Finance

​

Meghan Ryan, State Aid Programs Manager

781.338.6512

781.338.6507