Budget Proposal Relies on $440 Million in Federal Funding and Freeze to Cost Sharing Formulas

In a move criticized by both Democratic and Republican leaders, the budget proposed on Wednesday by Gov. Ned Lamont’s budget would postpone a total of $96 million of promised funding increases to school districts over the next two years. Instead, the school districts would be expected to rely on $440 million in federal coronavirus relief funds to provide for their needs over that time.

Melissa McCaw, secretary of the Office of Policy Management, said the funds originally designated for Educational Cost Sharing increases — $32 million for 2022 and $64 million for 2023 — would be directed instead toward closing a projected $4 billion gap in the general fund.  

“[We]’re going to leverage resources that are coming from Washington to help us address areas of need.” said McCaw. “And the Governor felt it was a significant amount of resources that would help us to get through the next two years.” 

McCaw said that the federal funding being directed toward school districts would be a far in excess of what the state has previously promised.

The Hartford schools , for example, would have received an additional $9.59 million in cost sharing funding over the next two years. The district will instead receive $45.73 million in federal funding.

Unlike the state funding, however, the federal funds must be directed toward coronavirus-related costs. These can include planning assessments and activities to help with academic learning loss, providing mental health supports, technology updates and facility maintenance and repairs.

School districts are also required to provide the state Department of Education with a detailed strategy for how they plan to use the funds. 

Currently, the state is advising districts to spend the money over a period of the two years. McCaw said that out of the $97.2 million federal funding allocated to the districts in the first round of funding in March, the districts had spent only $24 million so far. She said this indicated that the districts would be careful with these new funds as well.

McCaw also said that if the state had calculated cost sharing based on the most recent enrollment data, many school districts would have suffered as a result, given that 16,000 students have left public school districts this year.

Freezing the cost sharing formula at current levels, she said, would allow state government to hold school districts “harmless” for the decrease in student enrollment.  

Bipartisan criticism

The Governor’s decision has drawn disagreement from Democratic and Republican legislators who believe that the funding adjustments — the result of a 2017 bi-partisan agreement — should be kept on track regardless of how much federal funding is available. 

The Education Cost Sharing agreement distributes $2 billion in state aid to school districts based on the number of high-need students in a district and on the wealth of the municipality. 

In 2017, the formula was revamped to provide more funding to the neediest districts. The new funding levels were scheduled to be phased in over a 10 year period, ending with the 2027-28 school year. Under the Governor’s budget proposal, the phase in will be pushed back two years. 

State Sen. Bob Duff, D-Norwalk, said he believed the state government should continue to phase in the funding to communities, regardless of federal funding. 

“We’ve seen the cracks in the system this year,” he said, adding that both urban and rural districts had suffered from the fallout of the pandemic. “We should continue to honor that agreement.”  

While maintaining current funding levels is bad news for districts like Hartford, Waterbury and Ansonia, it’s good news for others. According to the cost sharing agreement, 95 towns were scheduled to lose funding over the course of the next two years. 

Yet, legislators also brought up concerns about how freezing the formula would impact equity. 

“The Governor’s budget is going to short-change some communities,” said State Sen Kevin Kelly, R-Stratford, adding that it could cause decisions about education to become a function of “political whim” rather than based on the needs of the students. 

State Rep. Robert Sanchez, D-New Britain, co-chair of the Education Committee, said he was “disappointed” by the governor’s proposal. 

“Cities like mine, New Britain, would have the same amount in the next two years, and it wouldn’t benefit us,” he said. “We can’t afford a freeze right now. We need that funding.” 

Over a “cliff”

Patrice McCarthy, deputy director and general counsel at the Connecticut Association of Boards of Education, said the Governor’s proposal would come down hard on districts expecting increases, but could also create some stability for districts in their budgeting processes.  

McCarthy said the uncertainty raised by the budget proposal could be a challenge for schools making their district budgets, which generally have to be finalized earlier.

McCaw said that the state’s Minimum Budget Requirement — which limits cuts to local school budgets — would prevent municipalities from using the federal money as an excuse for decreasing their contribution to the school budget. 

McCarthy said that since the federal funds were a one-time allocation, the districts would need to be careful to invest them only in temporary initiatives rather than in longer-term projects. Otherwise, she said, they would find themselves in a situation that was unsustainable. 

State Sen. Cathy Osten, D-Sprague, expressed similar concerns about setting municipalities up for what she referred to as a “fiscal cliff” after the federal funds run out. 

“I think we have to be very clear that we’re not setting those communities up to adjust to a $200 million shortfall in just two years,” she said. 

State Rep. Vincent Candelora, R-North Branford, said he wanted to see a more “granular” proposal from the Department of Education. He said that ongoing distance learning and lack of broadband had left urban, suburban and rural districts alike struggling with achievement gaps. 

“We have had children that have been learning in isolation for an entire year,” said Candelora. “We need planning and that planning to start now – for summer school, for programs to try to get these kids caught up.”

The budget does provide some new education funding — including increases to the per-pupil grant amount given to charter schools from $11,250 to $11,525.

Additionally, the budget proposal sets aside $275,000 in fiscal year 2022 and $900,000 in fiscal year 2023 to expand the Open Choice Program in Norwalk and Danbury. The program will allow 50 students in each district to attend public schools in nearby suburban towns. 

Sanchez said that while he was disappointed with the cost sharing proposal, he was also aware that this was still a “work in progress”. 

“I’m looking forward to sitting down with the Governor,” he said. 

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