The Envelop System of Foundation Budgets

When I first met my mother-in-law, I was totally fascinated by the organization she used to allocate family finances, the system we fondly refer to as the “envelop system”. My mother-in-law would take an amount of money each week, break it down into smaller portions, and put each portion in its own coin-sized manila envelop which was kept handy throughout the week.

For example, if she budgeted $100 for food shopping throughout the week, five $20-bills would be put into the grocery envelop. When the money was gone, she either shifted cash from another envelop to buy something or went without until next payday.

In my mind, this is an apt analogy for what is happening in the Foundation Budget nightmare currently in place in our Commonwealth. The Commonwealth assigns a set dollar amount of aid for each community based on particular spending allocations, the chunk of money arrives at the municipality and when it doesn’t fully cover one spending category, the schools shift the funding from one category to another that has been shorted.

However, one of the biggest issues with the Commonwealth’s envelop system is that the money going into each envelop is the same amount as was used in 1993, over 25 years ago. Imagine trying to run your own household using the same amounts of cash as you comfortably spent in 1993.

Lowell Superintendents’ Forum, 4/22/2019

In Lowell, we heard last Monday about a shortfall of nearly 500 classroom teachers each year. Big underfunded and under-calculated items in the Foundation Budget are surely contributing factors to this. If a district such as Lowell has huge differences between the Commonwealth’s foundation budget determinations for school spending and the amount spent is more than what has been put aside, there are two choices.

Applying the “envelop system” demands a municipality either a) add money from the municipal coffers to make up that difference or b) shift funding from one category to another.

Of course these differences between state funding and actual spending are quite common – not to mention quite large – when the basis for the Foundation Budget calculations have not be updated in about 25 years. If state funding is based in the 1990s but actual expenses reflect the reality of 2019, it follows logically that there will be a huge conflict between state funding and reality. The differences are exacerbated when a municipality, like Lowell, Brockton, Springfield or Worcester, cannot contribute beyond what has been calculated in the Foundation Budget numbers, something a more affluent city of town might be able to do. It follows, then that some difficult educational budgeting choices must be made.

A gateway city, like Lowell, has nearly zero percent chance of not feeling some excruciating budget pain which brings us up to the shortfall of 500 classroom teachers. It is indeed painful to Lowell and to our children.

Four major areas – think of them as “envelopes” – need Foundation Budget reform: English Language Learners, Special Education (not including the Circuit Breaker), Health Insurance and Low Income. All of these funding categories are based on amounts that were set in 1993 which means that when one looks at what the Commonwealth funds and what the expense reality in 2019 is, there are huge variances.

Lowell Superintendents’ Forum, 4/22/2019

Let’s consider the budget “envelops” for a couple of these categories. The Foundation Budget calculates Special Education spending at $16.7 million, but the actual cost of Special Education in Lowell is $31.1 million. That’s a difference of $14.4 million which has to come out of one of the other budget envelopes. Health Insurance as budgeted through the Foundation Budget calculations is figured at $17.3 million, but the actual insurance costs, even after switching to a cost-effective plan like the GIC, is $33.1 million. Surely no one in Massachusetts is expecting to pay the same insurance costs as they did in 1993, so is it any wonder that the Foundation Fund amount is so out of whack?

As a taxpayer, a voter, and as a former educator, I am shocked when local politicians claim there’s no money to correct this. I think it is more likely there is no courage because that is what it will take to face the reality of underfunding schools. Revenues to fund schools, as well as transportation and infrastructure, in our Commonwealth are essential.

The envelop is empty and there is no time to waste.


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