MEPRI urges reindexing of Maine—s school funding formula; reindex could cost about $37.4 million

A panel from the Maine Education Policy Research Institute (MEPRI) told the Legislature—s education committee that a longstanding mismatch between the state—s minimum teacher salary and the Essential Programs and Services (EPS) funding formula is undercutting the formula—s adequacy.

Amy Johnson, MEPRI co-director, said the EPS allocations combine three main elements — student-staff ratios, a salary matrix that reflects staff experience and education, and a regional adjustment that accounts for local labor-market cost differences — and that the regional index has not kept pace with policy changes. "What we would be doing is reindexing how we do regional adjustment so that everybody starts with a minimum of 1 and only goes upwards from there," Johnson said. She added that a retrospective simulation run on the FY26 model showed the state share of that catch-up reindexing would have been about $37,400,000.

Why it matters: In FY24 the state set a minimum teacher salary that became the policy floor; MEPRI—s analysis found the FY24 reported mean teacher pay was roughly $44,970, creating a gap between the statutory minimum and the historical average used in the old index. Because the regional adjustment in many labor-market areas remains below 1.0, some districts have been allocated less than the policy minimum would imply, leaving local taxpayers to make up the difference.

What MEPRI proposes: The institute recommended two linked changes. First, reindex the regional adjustment to a nationally recognized cost-of-living measure and set a floor so regional factors do not fall below 1.0. "It makes it easier to make sure that you haven't given less resources to a district than they actually need to pay their teachers based on the state policy," Johnson said. Second, MEPRI presented a redistribution option that modestly incorporates community income into each district—s mill-rate expectation. In the example MEPRI called "90/10," 90% of the mill-rate expectation would remain property-value based and 10% would reflect community income proxied by the share of economically disadvantaged students; the institute said this would reallocate existing state subsidy rather than add new state dollars.

Simulations and tradeoffs: MEPRI emphasized that its figures are simulations run with the Department of Education—s model and would change with updated FY27/FY28 inputs. The reindexing simulation produced the $37.4 million-state-share figure for FY26; the institute also ran combined simulations showing how pairing the reindexing with a 90/10 income adjustment reshapes local and state shares across school administrative units (SAUs). MEPRI noted one labor-market area (Skowhegan) that could lose under some options, and it recommended the committee ask staff for additional scenario runs (for example 80/20 or 75/25) using the FY27 model.

Local cost and implementation timing: MEPRI and members stressed that implementing the reindexing in a year after budgets are set could be disruptive. "If we were to implement it in fiscal year 27 or fiscal year 28, it would cost at least that much in addition to what's already been out there in state budget for '27," Johnson said, and she warned that changes should be timed to minimize disruption to SAU budget planning.

Next procedural steps: Committee members requested additional simulations (alternate income-share mixes and FY27-model runs). MEPRI said the proposals would require statute changes for some elements (the law currently specifies salary-based regional indexing) and that the institute would provide the requested simulations and follow-up materials.

Ending: The committee agreed to schedule further briefings and requested MEPRI and department staff run the alternate scenarios before considering statutory language or committee bills.